After finalizing a home for purchase, the next is to avail a home loan in order to plan funding to pay for the purchase of a property. But, the fluctuation of interest rates due to the change in market trend and the change in CRR that is the Cash Reserve Ratio plays an important role in the fluctuation of interest rates. Thus, the home loan you bought at an interest rate can go both up and down and so thus the amount of your Monthly Equated Income [EMI] can change. This leaves a huge impact on the budget of a family and hence you should plan things in a certain manner. So, below we are listing the things that every person must consider while availing a home loan:
- Manage Funds for Prepayment
Firstly, you can start saving to make a partial payment of funds when the home loan EMI begins. This action proves helpful when the interest rate fluctuates and also when you know that huge expenses are going to come your way. So, save some amount of money in a timely manner in order to deposit an amount in bulk which is known as a prepayment of a home loan.
- Wait for the Right Time
Secondly, don’t take the decision of property buying in a hurry as it can spoil your entire budget due to the fluctuating interest rate on a home loan. So, start looking for a property and pay some token amount other than keeping the property seller engaged in different manners such as delay in site visit, yet to discuss it with the family and other things as all this will pass time and then you can make final decision of home buying as soon as the right time begins while considering property price, market trend and interest rate.
- Opt for a Fixed Interest Rate
The fix interest rate is the best way to secure yourself while dealing with the rise and dip in the interest rate on the home loan amount which you have availed for the home buying purpose. Many people opt for the floating interest rate which makes them pay more in case the interest rate increases. Apart from looking at the low EMI in case of a dip in the interest rate is not a long-term benefit that you can enjoy. But, the option to choose a fixed interest rate can help you maintain a steady EMI irrespective of the increase/decrease in the interest rate.
- Pay in Bulk at Regular Interval
This is one thing which brings in huge relaxation from the continuous fluctuation in the interest rate of a home loan. So apart from saving for a prepayment of the interest save some amount of money more and deposit it into the bank. This will help you in a dual manner. Firstly, you will have lesser EMIs to pay as this bulk deposition of the amount will deduct a couple of EMIs instantly and also help you get a deduction from the increasing interest rate.
- Transfer Home Loan to Another Bank
The last thing, you can do is the transfer of home loan from one bank to another. Compare the interest rate of all the banks including both Government and Private ones and apply for a transfer of home loan from the bank which sanctioned the same to another bank/financial institution that is offering less interest rate.
These are the five things you must consider in order to counter the fluctuating interest rate on a home loan.