Mastering Your Housing Loan: How to ensure a smooth loan payment

Given stories of foreclosed properties or accumulated debts, the thought of securing a housing loan can be quite scary. And, as a result, most people wonder if it’s still practical to get one or wait and save big, or just hope for a lottery win. Of course, the answers to that depends on one’s perspective and strategy. Nevertheless, it may make sense to explore the various ways to master the housing loan game and finish strong.

✅ Make the Right Move

Before signing a deal with your loan provider, work backward by knowing your capacity to pay and examine your income stability. As a rule of thumb, your monthly personal or household income must be 3x your monthly installment payment. Use this figure as a price range to scout for a property. Once done, pick a loan package with the longest fixed-rate period. This option will allow you to avoid fluctuating interest rates and therefore, give you an upper hand on your cash flow. Knowing your equated monthly installments (EMI) will greatly help you in budgeting and long-term financial planning at least before your interest rate gets a repricing. If you’re still confused with all the computations, you can search for properties on OnePropertee using only your monthly income and the system will match it with properties that you can afford! Check out the Income Filter.

✅ Keep Yourself Updated

Ensure that your loan provider has all the possible ways to communicate with you. This may sound basic but this issue is often overlooked. Make sure that all your loan documents and notices in relation to your loan will be sent to you electronically or via SMS. It’s essential that you are updated with your account and transaction details, such as account number, interest rate, monthly amortization, outstanding balance, etc.

✅ Convenient Payment

Choose a payment facility or method that is most suitable for you. Remember that a penalty for overdue and late payments will usually be charged on or before the due date. Delays and defaults may even be reflected in your external credit rating history. To avoid this, enroll your account in online banking or auto-debit arrangement. You can even arrange a salary deduction from your payroll account so it goes directly to your amortization. This is the most practical and time-saving solution that will save you the hassle and even teach you financial discipline.

✅ Consider Overpayments

Do you know that majority of your monthly payments in the first few years go to the interests? This is why short-term loan tenors have lower interest charges compared to long-term which usually has sky-rocketing interest charges. One way to hack this is to pay the excess amount every billing. You can also do this when you have extra cash from bonuses or side hustles. The extra payment you pay goes directly towards your principal. Once your principal shrinks by the day, your remaining balance will slowly go down too. With this, you might be able to pay your home loan faster than scheduled.

Remember that an impressive home loan payment history will not just give you peace mind.  Once you build a credible credit history, it can actually be a prelude for greater opportunities in the future.

Are you currently looking for a potential first property purchase? Head over to OnePropertee and check out some of the top properties that match your budget using the Income Filter. Happy home hunting!