A home loan is a big responsibility, a long-term one. It only takes a few days to take up a home loan, but it takes years to pay it off. On average, a home loan lasts about 10–25 years. This is a long period for anyone, and a person may undergo many changes in it. Maybe you get a raise, your spouse starts earning more, or you create more streams of income during this time. There are chances for you to become even more financially strong in this period. When you apply for a home loan, you take into consideration the financial situation that you are in at that time. Your loan needs to upgrade along with you. This can only happen if you review it from time to time.
Reasons to keep reviewing your home loan:
Let’s have a look at the reasons why you should be reviewing your housing loan:
1) The market keeps evolving:
There are changes in the home loan market often. You will need to keep an eye on the market to ensure that your loan is still the best home loan for you. You may find a lower interest rate in the market. You may also end up finding a loan that offers better benefits to you. The mistake people make is usually forgetting that they can still upgrade their loans once they have signed up for them. If you do not wish to work with a new lender, you can check with your existing lender if they have made any changes to their housing loan plans. The duration of 10–15 years is a long time; the chances of your lender upgrading their loan packages are high. Make sure you make the most out of any changes in the market and get the best price at that time.
2) Changes in your income:
Changes can be both positive and negative. If there has been an increase in your income, you should not sit with the same loan plan. Why would you want to keep yourself in debt when you can pay it off faster? On the other hand, if times have not been fortunate and you do not earn as much as you did at the time of taking the home loan, it is the right time for you to review the loan. Any changes in your income are a good enough reason for you to have a look at all your expenses, and any loan should be at the top of the list. A home loan is no small expense; it is the one decision that impacts your entire budget and defines your spending in the following years.
3) EMIs are over your current budget:
Taking out a home loan is a significant financial decision. You need to have a look at your expenses with scrutiny before you apply for a housing loan. If you believe that you gave enough thought at the time of applying for the loan and still the EMIs are over your budget, do not worry. Some financial decisions can be tricky. It is okay if, at the time of applying for the loan, you thought that you would be able to manage the expenses, but things seem to go out of your hands. You can still make changes for the better. Reviewing your home loan can be really beneficial in a situation like this. You can have a look at the market and come up with a way to make adjustments to the loan. Remember, nothing is worth stressing yourself out about.
What can be done?
1) Pay it off early:
If you have an ongoing housing loan and the organization that you work for has been generous to you by giving you some extra bonus, or your side hustle has been flourishing, and you have started to make a good amount because of it, consider foreclosure on your loan. It might seem tempting to splurge the extra money on luxury items or on vacation, but nothing is going to be as relieving as being free from a loan. A home loan may feel like a burden on your shoulder, and you will want to free yourself from it as soon as you can. Any positive changes in your income can help you pay off the loan early if you make a few good financial decisions.
2) Consider a top-up loan:
If the loan that you have taken is not enough for you and you are still struggling to meet all your needs, you can consider getting a top-up on your existing loan. A top-up loan can be your savior in times of need. It is a form of personal loan that can be taken easily by only submitting a few documents. The best home loan lenders provide this facility. However, the interest rate on such a kind of loan can be a little higher since it is an additional top-up that you are applying for.
3) Switch to a new lender:
If you come across a new lender that is offering you a better interest rate or noticeably more benefits than your existing lender, you can consider switching to them. At the end of the day, any financial decision should be made in a way that you make the most of your money. Even a small difference in the percentage of interest can bring about a significant change. Always be on the lookout for the cheapest home loan for you. A percent may not seem important to you at that time, but if you calculate it according to the tenure of your loan, you will arrive at surprising results.
Summary:
The process to apply for a home loan ends when the loan gets sanctioned into your account. However, the real responsibility starts after that. It is one thing to take up a loan and another to manage it successfully. Managing your loans does not only mean paying off the EMIs on time. Sometimes, you have to be more thoughtful and keep looking for ways to ease the burden off your shoulders. This is done by reviewing your home loan periodically. Staying vigilant by keeping a check on the market and upgrading your loan accordingly is the smartest way to handle your loans.
