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Buried in debt and a loan to repay? Here’s a way out

Paying off extra EMIs when you get a bonus to talking to your bank to reduce your home loan burden during festive occasion offers can work in your favour

March 16, 2022 / 08:53 AM IST

A home loan is a great way to start building a property portfolio, but what do you do if you have stretched your finances to the hilt and are already burdened by debt?

Loan management can be a daunting task for many, especially in a high interest-rate scenario. It is important to stay on top of your credit-card payments and other loans you may have as well as manage your budget.

Here are some neat ways to enhance your home loan eligibility in the future, while taking some steps today.

Prepay an extra EMI whenever possible 

This is obvious. The first step is to try and reduce your debt. Find out if you can pay more than the minimum amount every year. If you can afford it, paying more than the minimum will help you save a lot on interest; you can also pay off your loan faster.

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One way to do so is by paying extra on the Equated Monthly Instalment (EMI) or by paying a lump sum. For instance, paying an EMI of Rs 30,000 will obviously look more onerous than paying an EMI of Rs 15,000. Yet, in this case, bigger is actually better because it will help you save big on the total interest cost; you will pay off a home loan much faster.

Refinance your home loan with a lower interest rate 

If you are struggling with personal debt, see if a lower-interest-rate home loan can help. Lowering interest rates help those who already have a home loan. This is because it allows them to pay off their loan faster and save on the interest they owe. There are two options: either refinance the loan with your current lender or transfer the balance to another lender who is offering you a better rate of interest.

Refinancing or transfering your home loan to another lender offering a lower interest rate is now easier than ever. With only a few clicks of the mouse or taps on your phone, you can compare rates and sign up for a new home loan in minutes. The option is a relief for many people who are looking for a way to reduce their monthly payments or get rid of their high interest-rate loan. It may also allow you to consolidate multiple loans into one monthly payment that could make it easier for you to stay on top of things.

Freelance to earn extra income on the side 

There are quite a few ways you can make money and use that extra income to pay off your debt. This may mean getting a second job, cutting down on your spending, or even selling some of your possessions.

You can now extra income through freelancing or working part-time. You may have heard of this one before. It is not a new thing, but freelancing is still an option if you want to earn extra income. Many companies require writers, designers, home loan advisors, translators, jobs that don’t need a lot of experience or qualifications but just willingness to learn new skills on the job.

You may be struggling with debt, but you're still managing to make your home loan payments. If this sounds familiar, it's time to find a solution. As a homeowner, you have many options to help you manage your home loan while getting out of debt. First, you should try to pay off your home loan as soon as possible. This will save you a lot of money in interest payments and also help build equity in your property.

Then, make sure that you have enough money set aside for emergencies before getting into a new home loan plan with high monthly payments. Finally, if you are considering refinancing your home loan, then make sure that it is worth doing so by calculating how much time and money it will require. These options could help keep your credit history from being ruined and protect what's yours!​
Atul Monga is Co-founder & CEO, Basic Home Loan
first published: Mar 16, 2022 08:53 am
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