Taking a home loan is agreeing to enter into a long term commitment for which one needs not just financial but physical and emotional preparedness to service the loan over a period of 10-20 years. As much you feel prepared to commit to long term debt repayment, there is no saying when life throws a curveball at you and an unfortunate mishap leads to your demise or brings your regular cash flows to a grinding halt. As morbid as it sounds, you have to take such possibilities into consideration, and safeguard your family from having to bear the burden of the home loan after your demise, or in the event that your regular cash flows are not adequate to meet your home loan commitment. Here are a few things you can do to protect your home loan and ensure that repayment is on schedule.
Opt for an insurance cover against the loan Some lenders insist on an insurance coverage against your mortgage, to protect your liability. Most commonly, a home loan protection plan is likely to be offered to you that offers a risk cover equal to the quantum of loan that you have opted for. You can also opt for a term cover to protect your loan commitment. Let us look at the difference between the two. HLPP You opt for a home loan of Rs 25 lakhs for 20 years. An HLPP for a sum assured of Rs 25 lakhs will cost approximately Rs 86,325. In a year’s time, your loan liability is down to Rs 20.5 lakhs. In case of your demise at this stage, the insurer will pay off your bank your outstanding amount. Term cover A term cover is more beneficial for the survivors of the policyholder. Here’s why. If we were to consider the same example of a home loan of Rs 25 lakhs for 20 years, where your outstanding balance (Rs 20.5 lakhs) is paid off to the lender and your family gets access to the remaining Rs 4.5 lakhs as well. A term plan is also more convenient in terms of premium payment, as unlike an HLPP, you are not required to make an upfront payment and can make periodic repayments like a regular insurance plan. Depending on your financial situation and the comfort of repayment, you can opt for either option to protect your home loan. Build a contingency fund Apart from opting for an insurance cover that safeguards your loan commitment, it is also advisable to prepare for exigencies while making a repayment each month through EMIs. When you have a major repayment obligation such as a home loan, it is wise to build an emergency fund that takes care of at least 6 months of your expenses inclusive of your home loan. You can consider investing in small amounts in liquid funds in order to get better returns rather than letting your money lie idle in a savings account. By taking these simple yet crucial steps to safeguard your home loan commitment, you can ensure the repayment of your mortgage is taken care of, no matter what the circumstances are. Regular repayment for the long term, will also help you build a credible track record and a high CIBIL score. A high CIBIL score will come to your aid as and when you are in need of any other line of credit.
Why do you Need a Financial Calculator?
The apparently elusive objective of saving more money regularly justifies the utilization of a Home loan EMI calculator . It is exceptionally supported when you are taking care of your cash. They’re easy to use and give you a decent picture with respect to where your cash ought to go. The entanglements of finding money related opportunity can be suitably made far less confused with the assistance of the Home loan EMI calculator.
You’ll likewise observe different keys that are special to this adding machine, for example, I (Interest Rate), N (number of installments), and PMT (installments) aside from the typical ones. A Home loan EMI calculator additionally permits you to work with negative numbers, which can be fundamental while computing a buy that requires an initial installment or on the off chance that you might want to ascertain the deteriorating esteem. They’re free and they’re easy to utilize. Everything necessary a couple of moments of your chance to utilize one, and see the way you have to take.
Spare yourself the problem of looking excessively hard, by attempting our Financial Calculators. Use online home loan EMI Calculator application to figure your EMI(Equated Monthly Installment), Balance Transfer Calculation and so forth in a viable manner. These calculators are the progressed Financial Tool that is helpful for everyday existence with every valuable element that stay up with the latest with the most recent news.
Advantages of using a Financial Calculator
There is no shame in looking for help when dealing with financial issues. A lot of investment decisions are complicated. The financial calculator will quickly reduce long complex complications for finance-related questions. Its use can be crucial to the stability of your budget.
- Taking care of debt – A debt counsellor can guide you to manage your debt issues. But if you’re not able to hire one, using references and tools such as a financial calculator can help. It can show you what it will take to escape the shackles of debt, in the absence of a real person. It can give you an estimate on how long it will take you to eliminate your debt based on how much you’re willing to pay monthly.
- Saving money –The financial calculator helps to put your savings goals into perspective. It will point out how much you’ll have to put away and for long you will need to do so to reach your target.
- Dealing with uninformed emergencies – Setting up an emergency fund is overlooked by many of us. It has caused many to fall from stability to depression, as they were not prepared for tough times. The financial calculator is a good tool to help you determine how much you can set aside for the emergency funds.