You can repay your mortgage loans without any risks if you follow the simplest guidelines we have listed here. Early and delayed repayments may attract penalty in some of the lending companies. So, you have to plan your repayment exactly according to the plan given by the lending company.
But there could be some issues from your end which may lead to short of funds. Here is how you can avoid such situations.
Plan for Mortgage
Salary Deduction: Follow the payment schedule for principal and interest every month. If you are an employee the best way is to deduct the loan at the source. It is possible to link your mortgage with your salary account. You can consult your company’s finance department and complete the required formal procedures. Then you don’t need to worry about allocating a fund for repayment every month. Moreover, you may get the benefit of tax deductions in your salary while paying for the mortgage.
Fund Allocation: If you are self-employed or a business owner, it is possible to plan your budget for the repayment. You have to do it before applying for the mortgage loan from the lending company. Only then you can adjust your other funds and ease your repayment.
Calculate Affordability: In both the cases above, you need to calculate your repayment capacity before applying for the loan. Discuss with your family about the restrictions they have to face on non-essential expenses.
Clear Debts: Clear all the other pending debts before applying for the mortgage. It is a good practice since you can win the trust of the lending company. It will also put you in a financially comfortable position. You don’t need to worry about making multiple payments and running the risk of being penniless.
Credit Rating: make sure you have a higher credit rating. You can make most of the purchases through the credit card which will help in creating the base for rating. But you should make all the credit card payments within the deadlines. It is the only method of boosting your credit rating for the mortgage lending company to appreciate and trust.
Plan for Expenses
Plan your personal, family and household expenses at the start of the month. Categorize them into critical, emergency, and essential groups. All the others will be non-essential. Eliminate the non-essential expenses and optimize the others. Make sure you have sufficient funds for emergency and medical expenses.
Plan for Extra Income
Every financial plan you make for a mortgage will be automatically accompanied by the need for generating extra income. It is the most comfortable way of allocating funds for your loans without having to be miserly on other expenses.
You may choose to take apart time job, freelance works, or choose other stable sources of income. It should be sufficient to repay the principal and the interest every month. Physically and mentally you may have to strain more in your everyday life. But your financial position will be stable throughout the repayment period and after the completion of the mortgage.