If there is a change in a financial circumstance, then the home loan buffer means a sum of money kept aside to manage loan repayment. A home loan buffer helps the borrower build a backup solution for the existing budget. When the times are in favour, creating a buffer is a good method to safeguard the borrower against the striking changes that may be unfavourable.
If you have borrowed a home loan and experienced a sudden additional financial support, the buffer will help you to survive in the circumstances. HDFC home loan calculator helps to calculate and will support while paying off the home loan EMIs.
Why Should a User Buffer Home Loan EMI?
Buying a house is a dream for every common man. And the Indian Government is encouraging people to invest in homes by making investments which will make them eligible for a tax deduction. When a user purchases a home with the help of a home loan, they are eligible for various housing loan tax benefits, which will minimize the taxes. You can also keep a reserve of three months’ worth of home loan EMI payments to receive additional benefits. Here are a few justifications for doing so.
- While purchasing a new house, users will have several other expenses apart from home loan EMIs. Expenses such as stamp duty, interiors, shifting expenses, home registration charges etc. are the costs.
- In case the possession is delayed, users will experience an additional burden of the loan along with the monthly EMIs. Thus, you require a backup solution which can help to pay both house rent and EMIs. A housing loan EMI calculator can help to calculate the monthly EMIs and helps to manage the monthly expenditure.
- If you are laid off from the job or do not have other income sources, then a buffer will help to make home loan EMI payments. Also, one can use a home loan EMI buffer to avoid penalties.
- If an unfortunate event takes place and if it takes time to get the insurance policy benefits. Then in such a scenario, one can use a housing loan EMI calculator and home loan buffer to manage the situation.
Steps to Buffer Home Loan EMIs
- Work on Numbers
Before initiating a home loan buffer, check out the minimum amount you will require to save. To do it, you can use the HDFC home loan calculator, a premium tool which will help you to calculate. Some experts also believe in having an equivalent of six months of Home Loan EMI repayments to be saved.
- Think about Where to Put the Home Loan Buffer
The second step is to think about where to save the home loan buffer. You can also generate interest while developing the buffer. And, it is suggested to choose any savings or an investment account. One can also plan to link their loan buffer savings to their home loan, and performing this calculation can be a tedious task. One can use a housing loan EMI calculator and can count the amount.
- Transfer a Lump Sum Amount
If you have some additional money saved in other bank accounts, you can start building the home loan buffer by transferring all or a portion of this money into the redraw facility or your offset account. An HDFC home loan calculator can help you to calculate and plan your budgets.
- Strive to Get a Good Interest Rate
Try to get the lowest home loan interest rate. You can begin creating a buffer if you continue making the same amount of payments toward your home loan as you are currently doing. Use a housing loan EMI calculator or connect with a lender and understand how to lower the interest rates. If things are not in favour, then you can plan to transfer your home loan. Interest rates are at record lows, and there is currently fierce competition among lenders. And, it is the right time to refinance the home loan, and with an HDFC home loan calculator, one can plan to do it.
Conclusion
Creating a home loan buffer requires a lot of discipline, and the above-mentioned steps in the article will help the process of building a home loan buffer easier. Similarly, tools such as the housing loan EMI calculator will also help you in calculating and managing budgets. And, if situations are in your favour, then you might not require to use the home loan EMI buffer amount. In such cases, one can calculate their amount and tenure accordingly with the HDFC home loan calculator and perform a complete prepayment or part pay of the home loan.
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