How Not having the Headache of Paying EMIs can help you?
EMIs… The very mention of this word has people calculating numbers — how many more days to go? How much will I have left in my account?
EMI or Equated monthly instalment is a fixed payment amount made by a borrower to a lender. It’s done at a specified date each calendar month.
So if you have taken a home loan, you would have to pay your respective bank this EMI.
But what if you had an option to NOT PAY EMIs??
Is it possible? Yes, it is!
Considering the economic recession, real estate companies have come with a series of special offers like:
• No EMI till possession
• Few months of No EMI
For the builder/developer it’s a marketing gimmick to increase sales during a slowdown. However, for the customer — it’s a blessing!
This is why:
Make a bigger down payment
Banks & financial institutions finance up to 80-90% of the property’s value. Generally, the homeowner has to contribute a minimum of 10-20% as a down payment.
But this means you pay interest on a bigger amount — which is eventually increasing costs. With a few months of EMI savings, you can make a bigger down payment. A higher contribution from your own pocket is a prudent move.
It helps lower your LTV ratio or the Loan-To-Value ratio (ratio of the loan against the property purchased) and loan amount required. This in turn enhances your loan eligibility — so you have a better chance of getting a loan approval.
Get better rates of interest
With no hassle of EMIs you can get better rates. This holds particularly true for individuals who already have other loans on their heads.
The higher the number of unpaid loans, the worse is your credit score. Your credit score is a numerical expression determined by the level analysis of you credit files.
In simple terms, it represents the creditworthiness of an individual.
For any existing home loan borrower who wants to lower EMI payments, then means a few added months of respite. You can repay your older creditors with peace of mind.
With delayed or no EMIs till possession, you can also plan your finances better. You can set aside funds so that timely repayments can be done. Many fret about EMI deductions from their salaries.
With a little delay, you can put together sufficient funds and breathe a sigh of relief.
EMIs take care of your rentals
Another added benefit is that your EMIs take care of your rentals. For instance, if you have the option to not pay EMIs till possession, the money you save here can be used to pay your house rent (if you are living in a rented apartment).
While paying both EMI and rental can burn a big whole in your pocket, this can mean BUMPER savings and NO RENTALS!
The respite you get from not paying a few EMIs too can lift a BIG financial burden off the shoulders. It is recommended that if you get such a scheme, don’t miss out!
It’s a great chance to save lacs of rupees, ensure shorter loans, repay them on time, etc. Be a smart borrower and evaluate your financial repayment potential before taking a home loan.