A home loan is just the beginning of a long financial journey. Repaying a home loan is a long and expensive commitment, and keeping track of your home loan can help you spot hidden charges, accomplish the loan’s timely repayment, and save money in the long run. Here are some actions that can help you stay on top of your home loan with ease.
Visit Your Online Loan Portal
When your loan is disbursed, the bank gives you access to the home loan portal. This portal comes with a number of tools that help you track your EMI repayment, know about the existing and past interest rates levied on the loan, outstanding amount, and other details related to your home loan. Each time there are any revisions to your loan – be it the interest rate or the terms and conditions – it all gets reflected here. You must regularly check this portal to stay on top of all the changes to your loan.
Check Your Loan Statement
Similar to a savings account, the loan account also allows you to access a statement of accounts. It is a good habit to check your home loan statement regularly. The statement contains the details of the loan from the time it started, and checking the statement regularly helps you track what you have already paid and what is outstanding. You will know whether your EMIs are getting credited to your loan account on time. A home loan statement can also be useful while claiming the tax deduction benefit U/S 80C or U/S 24. You can get the loan statement by requesting it at your nearest branch, online banking, or the lender’s mobile app. A loan statement can be highly useful to track the interest rate charged by the bank and know when the bank changes the interest rate applicable on your loan.
Read The Credit Report
The credit report reflects the information the lender has updated to the credit bureaus. There are instances when the lender reports wrong information to the credit bureau, which can negatively impact your credit score. Checking credit reports regularly can help you take corrective action in case there’s any discrepancy or mismatch in the information reported to the bureaus. The credit report can also help you in verifying your records and the lender’s records of the EMI payments. Keeping strict watch on your credit report can also help you maintain a high credit score.
Check The Amortisation Schedule
Adhil Shetty, CEO, Bankbazaar.com, suggests, “Interest rate is one of the most important components in the home loan process. A little escalation in the interest rate can make a huge difference in your overall repayment obligation.” So, it’s crucial to keep track of the interest rate charged by the lender and understand the impact of the change in interest rates on the cost of the loan. Similar to the loan statement, the amortisation schedule shows the previous interest rates and payments. In addition, it also shows the number of outstanding EMIs after the rate change and a detailed split of the principal and interest components in the EMI. This data will show you the exact impact of the rate change and give you a clear idea of the corrective actions you need to take in order to keep your overall interest outflow within limits.
Loan Agreement Terms
When the interest rate increases, borrowers may choose a longer tenure or increase their EMIs. If the borrowers don’t approach the lender with a preference, the bank follows the default option as per the terms and conditions mentioned in the loan agreement. Typically, this is an extension of tenor as opposed to an increase in EMIs. This is just one of the terms and conditions out of several covering everything from how the interest rate is calculated to the structure of the EMIs to pre-payment, penalties, and more. So, you should read the loan agreement carefully to keep close track of your home loan. A loan agreement also plays an important role in understanding the charges levied by the bank and knowing the procedures when you plan to pre-close your loan or switch the loan to another bank.
The home loan journey only begins with a loan. Being an aware borrower can keep you safe and bring you significant savings in time, energy, and, of course, money and make your journey as a homeowner easier. Hope these tips will make your home loan journey easy and happy.