September 22, 2021

How to Reduce Home Loan Burden with an Annual Bonus?

May 26, 2021

If you have availed a home loan, you must keep up with regular EMI payments to avoid home loan default. However, at times, managing monthly expenses and paying home loan EMI can be financially straining. The situation could get even more critical if you are the sole earning member of the family. Thus, whenever an opportunity arises, you must try to reduce your home loan repayment burden. Ahead, we have elaborated on how you can make use of the annual bonus to save on your EMI outflow and make repayment easier.

Using an Annual Bonus for Making Part-Prepayment of Home Loan

Your annual bonus is no less than a blessing in case you are finding it difficult to pay home loan EMIs regularly. Therefore, use your annual bonus wisely rather than spending it impulsively on an exotic vacation or an expensive purchase.

Use your annual bonus for paying an extra EMI every year or making a part-payment of your home loan. This will help you close your debt sooner by reducing the loan tenure. By prepaying your home loan, you can also opt to reduce your monthly instalment. This will decrease the chances of home loan default. You can save on the interest pay-out by repaying your home loan sooner than the specified tenure. Also, timely repayment will boost your creditworthiness, thereby making you eligible for attractive loan offers in the future.

Before using your annual bonus for home loan prepayment, ensure to make a note of the prepayment charges levied by the lender.

Learn about home loan prepayment with the help of an example:

Suppose you have taken a home loan of Rs 50 lakhs at a rate of 8.5% for 20 years. By using a home loan EMI calculator, you can easily get an estimate of your monthly instalment, which would be Rs 43,391.

Now, consider that you utilize your annual bonus and surplus income to make a part-prepayment of Rs 2 lakhs. With the help of a home loan prepayment calculator, you can easily calculate your revised EMI. You must enter the details such as the loan amount, tenure, interest rate, and the prepayment amount in the calculator. For a part-prepayment of Rs 2 lakhs, your revised EMI will be Rs 41,656. This would mean a reduction of Rs 1735 or 4% EMI savings.

However, if you wish to close your home loan sooner, you can keep your EMI at Rs. 43,391 and reduce the loan tenure.

You must not default on your home loan under any circumstances. This is because a home loan is a secured loan, and thus, in case of a default, the lender reserves the right to seize your property to recover its losses. Therefore, make sure that your home loan EMIs are always affordable. The longer the loan tenure, the lower will be your home loan EMI. Whereas, for short-term home loans, EMIs will be comparatively higher. However, the good thing is that you will be able to bring down the overall cost of borrowing by opting for a short-term home loan.

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Consider Taking Private Moneylender Singapore Loans

May 12, 2021

Private moneylender Singapore offers are often a suitable alternative financing alternative. The paperwork is minimal and hassle-free; receiving an approval is much easier to get. Private money is asset-based. The authorization comes from the worth in the property, and never ever the consumer’s credit score of monetary history. In private money, the property or collateral is the debtor’s residential property or company. For bank loans, collateral is regrettably the debtor’s personal car or residence. Financial institutions are under government constraints when it involves authorizations and private money lenders are not.

Difference in interest rates and terms

Both banks and private lending institutions will need some form of ahead of time settlements or commitment fees, but many banks require upfront application fees even before an authorization. Terms and prices vary dramatically for each as well. Financial institutions normally offer lower interest and a fixed rates to be settled over specified years IF you can get an authorization. Varying, (flexible) terms could mean that payments become more expensive in time.

Private money lenders tend to have higher rate of interest on their bridge loans, but loan to a series of credit ratings and provide a temporary repayment routine. Terms are likewise able to be made more adaptable when it involves bridge loans and do not vary. On the other hand, banks have rigorous guidelines and criteria they need to follow when it involves specifications for lending cash.

Common uses of private loans

Make Home Improvements

If you’re wanting to add a new space to your house or buy a new COOLING AND HEATING system, you could take into consideration resorting to a personal loan

Pros described: If you are in need of an urgent residence repair, a personal loan may be among the fastest means to obtain the money you need. You can generally obtain your money within a couple of business days. And also, some choices include loans backed by your home, meaning you could lose it to repossession if you do not make your payments. With a personal loan, you do not deal with that danger.

Disadvantages clarified: Personal loans generally feature greater rates of interest than house equity loans, which could eat away your residence improvement budget plan.

Alternatives: Depending upon the extent of the project, you might think about undertaking more affordable debt. Home equity loans let you access the equity developed in your home, usually at reduced rates. A cash-out refinance entails securing a new home loan for a greater quantity than you presently owe and after that taking the balance in cash, which you can then make use of for whatever you desire.

Covering emergency situation clinical costs

You may not always have that extra cash to spend for emergency medical expenses, after all they do not constantly happen by choice. When this takes place, a personal loan can offer the funds you require for such unforeseen events so you can concentrate on recuperating to get yourself back on track!

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