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    Tips for balancing home loan payments and other financial goals

    Tips for balancing home loan payments and other financial goals

    Tips for balancing home loan payments and other financial goals
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    By CNBCTV18.com Contributor  IST (Updated)

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    Buying a home is a once-in-a-lifetime opportunity that is why choosing the best home loan product becomes crucial. As a borrower, you must exercise caution and gain enough information to make an informed decision before taking such a significant step.

    A roof over your head is a basic necessity, and a home loan is a tool that makes it possible for you. But even a slight error in choosing a home loan product can put an unnecessary burden and increase the cost.
    However, an excellent strategy can help in ensuring your financial goals don't get interrupted. Here we have listed some essential things to keep in mind before applying for a home loan.
    Keep affordability factor in mind
    Although there are many options available for a home loan, affordability is the critical factor to consider. Home loans are a long-term repayment commitment, and not being able to pay EMI can increase interest charges and ruin your credit score.
    So, consider your income stability, current and future earning capability, and other factors to decide if you'll be able to manage your financial goals comfortably after taking out a home loan.
    Learn about the interest rates
    The interest rate of a home loan also plays a vital role in deciding whether to take out a loan and which lender to choose. Apart from that, you must know about the various types of interest rates offered by banks and housing finance companies. Hence, select the digital lending platform for comparing loan options offered by several lenders.
    This will help you save up for the other financial requirements.
    Carefully choose the Loan tenure
    When choosing a home loan tenure, you must be careful while deciding on the final loan tenure. There are two approaches to choosing home loan tenure, based on your budget and needs. If you opt for a short loan term, you need to pay a significant EMI. While this lowers the interest rate, it can stretch any financial budget.
    On the other hand, if you choose a long home loan tenure, you will end up paying a lot of interest money towards the completion of the loan term, even if you pay a low monthly EMI. Hence, choose a loan tenure that neither strains your budget nor burdens you with an EMI load.
    Have a look at your credit score
    Lenders consider a credit score of 750 or above to be favourable. Consumers with such scores have a higher possibility of loan approval. But, if your credit score is below average, they will charge you a higher interest rate on a home loan. So, while applying for a home loan, be sure your credit score is good and take actions to prevent it from falling in the future.
    Consider the option of partial pre-payment
    Choose banks that will not charge you a fee if you make partial payments on your loan. If you have any extra income, use it to make partial payments on your loan. This type of partial payment helps reduce your loan amount and your interest outlay on loan. It will also help close the loan before the tenure.
    Buying a home is a once-in-a-lifetime opportunity that is why choosing the best home loan product becomes crucial. As a borrower, you must exercise caution and gain enough information to make an informed decision before taking such a significant step.
    This article is authored by Pramod Kathuria, Founder and CEO at Easiloan
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