When your home loan EMI payments begin, there are three things you should do.
Homebuyers must make some shifts in their financial lives to deal with the pressure of home loan EMI to escape the hassles that come with agreeing to a long-term payment.
When the long-term of equated monthly installment (EMI) payments begins, homebuyers will be forced to show financial prudence. Since home loans are usually taken out for 20 to 30 years, you will have a long period until you are free of this obligation.
Since the home loan EMI will deplete a portion of your monthly revenue, it’s in your best interests to make some lifestyle adjustments and keep your finances in order to cope with this new burden.
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Keep a certain amount of money in your EMI account.
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Each default does not only result in a penalty from the bank. Failure to pay your home loan EMI on time will appear on your credit sheet, which is held by credit bureaus in India. As a result, you’ll have a harder time getting more credit in the future.
Avoiding an EMI default condition is in your best interests. Maintain a certain balance in the account that is added to your EMI payment for this. According to financial advisors, the portfolio can still have enough money in it to fund three months’ worth of EMI.
Be sure you’re conscious of all the tax breaks available to you.
As a home loan holder, you are eligible for a variety of tax incentives. (For more information, see this comprehensive guide.) A homebuyer will deduct up to Rs 5 lakh from his income by invoking different parts of India’s income tax (IT) Act.
However, there are two factors that could stymie a buyer’s decision:
- He has no idea which parts refer to him.
- Failing to include the appropriate parts when announcing your annual contribution
Because of this misunderstanding, the creditor can incur significant financial losses. One major blunder you might make is to believe that if you share the details on serving a home loan with your boss, they will immediately assist you in claiming all of the tax deductions. It is your responsibility to claim all deductions and provide evidence to back up your allegations.
Look at other ways to make money.
Frequent work transfers are not seen as a good trait in a borrower by banks. This is why most financial planners recommend that you stay with one job for a while before looking at home loan options.
However, after you’ve secured the loan, you can look for a new career to supplement your salary. Increasing your revenue is the only way to cope with a rise in your liabilities; penny-pinching can only get you so far.
Furthermore, now that you have extra responsibilities, career stability is paramount. Only work with businesses that can provide you with workplace protection in addition to a raise in pay.
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