Taking a home renovation loan can be pretty exciting because people take this loan to design their dream home in the way they desire. Home renovation loans are no less than a blessing for people who have always dreamt of living in a luxurious home but do not have enough money to invest in one go for renovation purposes. While taking such a loan is easy, paying back the same needs a lot of effort and may also lead to a financial crunch if you do not set money aside in an orthodox manner every month to repay the loans.
Also, for people who have multiple loans in their name, paying EMIs can be a big deal which may make them struggle for funds every month. But there are ways to manage your finances when you take a loan. Here we pen down a few tips that can help you in the effective management of your home renovation loan repayment without stressing your pocket:
Take a loan that you can afford to pay
Before moving ahead to other loan management tips, the first and foremost thing you should consider is to only take an amount you can afford to pay back. For this, before you apply for construction home loans, make sure that you calculate all your monthly expenses. Sum down all your domestic inventory expenses, education expenses, medical expenses, and any other expenses you can think of that affect your budget. Accordingly, find out how much you can save and how much money you can use out of it for loan repayments. Accordingly, apply for a loan so that it doesn’t make you struggle while paying the EMIs.
Increase your repayment
One of the most effective and easiest ways to get rid of your debts soon is to increase the amount of repayments. As you get a salary hike or have additional funds in your pockets, consider using them to clear off your debts early. Whenever you have some extra cash flow in your account, use it for repayment purposes because it will considerably reduce the loan interest amount.
Practising the debt avalanche method
To practice this method, if you have two or three loans in your name besides the home repayment loan, analyse which loan is charging you the most interest. Accordingly, frame your strategy such that you pay off the loan that charges you a higher interest rate. Prioritising loans with higher interest rates in descending order and tackling it one by one going forward will help reduce the interest burden and get you freedom from loan repayments in a quick time.
Consider some lifestyle changes
Even small little things can go a long way to make considerable differences. Hence, a few lifestyle changes and adjustments can work effectively in managing your financial condition to accommodate loan repayments. When you opt for some lifestyle changes, you can better accommodate your loan repayments and take out some higher amount for paying the EMIs. Lifestyle changes can be done in various ways, such as cutting down unnecessary expenses and luxuries, outings, movies, outside dining, and weekend vacations. There are a plethora of ways by which you can cut down on unnecessary spending and use the saved money for paying EMIs until and unless the loan is fully repaid.
Keeping your credit card at bay
This is another effective hack that can help you manage a home renovation loan. Having a credit card and using the same means taking more loans though for a short term. Also, when you have a credit card in your pocket, you feel tempted to buy more things despite calculating the maths of how much money you have to spare for such additional expenses.
Thus, it is always a good idea to keep your credit card on the back burner and use cash instead so that you do not have to pay an additional credit card bill at the end of the month. And, in extreme cases, where you do not have any option but to use your credit card, consider asking your credit card company to lower your expenditure limit. This way, you set a boundary restriction of using your credit card and do not get swayed away with the flow.
Use investments for repayments
Is any of your FD maturing sometime soon? Do you have any extra amount of money coming your way? If this is your case, then consider using that amount for repaying the loans. If your debt situation worsens, you can also consider using your gold holdings for rescue. Then if such a need arises, you can make up your mind to take a gold loan because the interest charged is quite less or even consider selling it in extreme cases if you find it difficult to repay the loans.
These are a few efforts that you can consider making from your side to reduce your debts in the first place. Other things, such as vacations, and getaways, can wait for some time. But if you save money by putting in your efforts by implementing the hacks mentioned above, it will help you get rid of your debts soon and will also lower the total interest amount you pay. So, try practicing these tips and thank us later!