Dear All, home loan takers this one is for you –
The Corona Pandemic has caused a serious health hazard across the Globe and we Indians are no exceptions. The Corona Pandemic has led to an Economic Pandemic worldwide with countries staring into recession. Massive job loses, salary cuts and visibly poor future growth prospects truly are scary.
However, if the situation is wisely handled both in terms of health care and financial management then there is no reason that we will not triumph over these unprecedented situations.
The Govt of India has taken proactive steps by announcing a 21-day lockdown to ensure social distancing which can probably keep the epidemic a bay and we pray that this works.
I take a step forward into suggesting how you could better manage your personal finances in lieu of managing your home loan.
2 important things that I advocate/advice
- RBI has today announced a 3-month moratorium for all retail and corporate borrowers for there EMIs and the financial institutions will not treat these as default. Meaning, you could postpone your EMIs for 3 months and your credit history will not be affected. Kindly write to your bank and avail this gesture of RBI. The RBI has also announced a huge cut in REPO RATE of 75 basis points reducing from 5.15 % to 4.4 %. If you have a repo linked home loan than your EMIs will reduce substantially. Even if you don’t have a repo linked home loan by virtue of competition in this low rate regime you can definitely negotiate with your bank to consider a low interest rate on your outstanding home loan which will lead to a reduced EMI and hence some saving for yourself in these tiring times . Please proactively work on adjusting your interest on home loan with your bank.
- I strongly recommend to look into your finances and consolidate your savings. Take this opportunity of making a repayment of your outstanding home loan amount to whatever extent as is possible. This will result in a low outstanding debt leading to a smaller EMI. Three benefits you can derive from this:
- You work on a low debt and hence chances of default reduce safeguarding you from a spoiled credit history.
- With surplus available you are always tempted to spend on nonessential – discretionary spending on luxuries etc that is saved.
- In case you have any fear of job loss or salary cut you are in a better position to manage your finances with limited liabilities.
Friends it is always wise to assess current situation and quickly adapt to changed financial environment by changing your spending habits and better handling your finances.
I wish the above will give you food for thought and will help you reorganise your home loan commitments.
I will keep you update on my further suggestions as per the further announcements.