2 Suggestions for your home loan management in times of Corona Pandemic

Tips for Managing Your Home Loan

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 exception. The coronavirus pandemic has led to an Economic Pandemic worldwide with countries starting into recession. Massive job losses, 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.

HEALTHCARE

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.

FINANCIAL MANAGEMENT

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

1. RBI has today announced a 3-month moratorium for all retail and corporate borrowers for their 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.
2. 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 then 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 a home loan with your bank.
3. I strongly recommend looking into your finances and consolidating your savings. Take this opportunity of making a repayment of your outstanding home loan amount to whatever extent 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 are reduced 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 the current situation and quickly adapt to the 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 updated on my further suggestions as per the further announcements.