How should one factor aspects like other household expenses, etc. along with the repayment sum while applying for a home loan ?

The fluctuating interest rates resulting in additional pressure on household expenses, borrowers are forced either to increase their home loan EMIs or make a prepayment on the loan to keep home loan duration under maximum permissible limit. Irrespective of where interest rates are, home loan borrowers should look to aggressively pay back their home loan by doing partial prepayments from time to time whenever possible. The method is to make use of any one-time income like a bonus, salary arrears, gifts from friends/relatives, any wind fall gains from shares, property sold, deposits closed, tax saving investments maturing, closure of savings that are giving you lesser returns than the housing loan, etc to partially close the housing loan. Make sure you bring your home loan at comfortably manageable levels with course of time. Make a list of all the loans and savings/investments that you have made. If the savings is giving lesser returns than the loan rates then it is better to close all or most of these lesser returns savings and divert the funds to close the home loan.



 How can one reduce the interest rate ?

Submitting a higher down payment can significantly reduce your loan’s interest rate by 20% * to as much as 25%*. Therefore, prepare your down payment prior to acquiring a mortgage loan. Look for a mortgage lender that offers flexible repayment options. Make sure that modification of your loan’s term is possible just in case an unexpected event happens (ex. Unemployment or sickness).

First of all check out how much your purse permits to pay per month. Then find out what is the maximum EMI you can pay. Once you have the maximum amount, try to minimize the loan duration. The more you extend your loan, the more interest you pay. Of course decreasing your loan duration will increase the EMI, but look on the positive side.

These savings on interest could be used to manage other financial goals in life. So, it’s always advisable to pay more than the EMI. Basically, in the current times of higher interest rates, it is advisable to increase the EMI, and shorten the loan tenure. As other alternate assets are not yielding high returns, it makes sense to repay the loan in a shorter period of time. And when it comes to taking that extra burden of more EMI, one also needs to have prudent saving habits.


Look at how you can make more efficient the process you follow while repaying your home loan. You can start off by considering where you spend your salary other than on the EMI. Look at areas where you cut back expenses, especially on the discretionary areas. For instance, if you find out that expenses on eating out or else comes to paying some money per month, look at how you can reduce this, which will consume much less money. Spending less means savings more, which automatically makes your cash flow position comfortable. You should always maintain a contingency fund, which will help you pay your EMI’s even in cases of emergencies.