How to Manage Investments and Expenses with Loan Against Property

While repaying a loan against property is a big responsibility, you have to remember that alongside, you will have to take care of a host of expenses be it unexpected costs such as paying for a surgery and urgent home repairs, or paying for expenses such as living expenses, your child’s annual school trip fee, etc. Managing your expenses as well as loan against property in India can seem tricky. So, take a look at 5 steps you can implement to streamline your savings, expenses, investments and EMI payments towards your loan against property.

Pay higher EMIs on Debts to Reduce your Interest Payment

If you were to take a loan of Rs.20 lakh at an interest rate of 8% for 75 months then you would pay an EMI installment of Rs.33,974 with the total interest payment being Rs.5,48,004.

However, if you took the same Rs.20 lakh at 8% interest but chose a tenor of 30 months instead of 75, then your EMI would be Rs.73,777 and the total interest payable would reduce to Rs.2,13,298.

This way you will be able to save Rs.3,34,706 on your loan. So if possible, choose a shorter tenor and lower mortgage loan interest rates to boost your savings that you can further utilize towards everyday expenses and investments.

Choose a Lender with no Hidden Costs and consider a Balance Transfer

When you decide to go in for a loan against property in India, choose a lender that offers you a competitive interest rate.

This will help you repay the loan quickly, save money and manage your household expenditure and investments with ease.

However, it is important to also choose a lender after taking into consideration other costs as well, such as processing fees, foreclosure and pre-payment charges, secure fees, etc.

Evaluating costs on the whole will determine if the loan is truly inexpensive.

Also, if a few years into the tenor you find that your current lender has a high interest rate and is unwilling to negotiate, you can consider availing a balance transfer.

By transferring the outstanding balance to a better lender, you can lower the interest rate and access other benefits.

For instance, a Loan Against Property from Bajaj Finserv gives you access to a high loan amount of Rs.3.5 crore along with a tenor of up to 20 years, no hidden charges, as well as a top-up loan that you can use as you deem fit.

Use Cash Inflows to Aggressively Clear Debt

If you receive cash gifts, bonuses, appraisals or tax refunds, use them to reduce, if not clear existing debt.

This will make investing regularly and paying for expenses easier.

Alternatively, if your lender has a high pre-payment charge, invest the sum and use the interest income to pay for EMIs and other expenses instead of spending it on non-essentials.

By following these pointers you can easily manage to pay the EMI on your loan against property and meet your other financial responsibilities as well.

Also Read: Is it smart to invest money from a Loan Against Property?

 

 

Tags: Investments, loan against property, Managing your expenses

Category: Mortgage