Many of us opt for loans without taking into consideration the factors which can increase your expenses in the future. These include expenses pertaining to education, lifestyle, medical reasons, and inflation. Most importantly, we fail to consider to take into the fact that the interest rates in go up in the future despite it being told time and again.
If you feel like you are finding it difficult to manage your installments of the various loans which you have opted for including home loans, you must get your installment or repayment period restructured. However, you must ensure that the costs involved in getting your existing loan restructured does not exceed the amount which you save.
Reduce The Tenor
There is a correlation between the repayment tenor and the interest rates which is that for a given interest rate if the tenor is high, then the total interest which is paid will be higher. However, if the repayment period is less, then the interest paid will be lesser. For this reason, if the interest rates of your loan have been increased recently, then you should ask your lender to increase your monthly installment and reduce the repayment period.
Yes, it will increase the installment each month and will affect your finances but you will save a lot in the long run because the interest outgo in this arrangement will be a lot lesser.
Requesting for Better Interest Rates
If you have a good credit score and have been making your payments on time, then you can negotiate with your lender for a better interest rate. This will help you in coming up with a better repayment plan and manage your finances better. You can also opt for home loan balance transfer to other lenders who are offering better interest rates, and show it your current lender to get better interest rates.