Buying a home is a huge commitment that sometimes lasts a lifetime. People plan their entire finances around paying off home loans. When paired with other commitments and emergencies, home loans can become a strain on the finances of a family. It became quite evident in the wake of the coronavirus pandemic, as the lockdown left many people with reduced income. The Moratorium Period announced by the RBI and the Government proved to be a Godsend, especially for those who invested in luxury apartments in Chennai. The home loan payments were waived for a period of 6 months from March 1, 2020, to August 2020. But how much does the common man understand about a Moratorium? This article simplifies and explains how moratorium periods work and why they are beneficial to home buyers.
What is meant by the Moratorium Period?
A Moratorium period is an interval of time during which you are freed from paying your Home loan EMI’s both interest and principle. This helps you in planning your finances better. Say you take out a home loan but expect better money flow after 3 months, you can check with your lender if they offer moratorium periods. You can avail of one for the initial 3 months and start paying back the loan after that. This also helps you plan other commitments accordingly. You also get familiar with the process of the home loan and repayment schemes. This is a welcome relief for people who are posed with emergency expenses that leave them short of finances.
Benefits of a Home Loan Moratorium Period:
The first and foremost benefit is that you are completely freed from paying the EMI for the moratorium period.
You can plan your income and money flow better to deal with the upcoming EMI’s.
Taking a moratorium in the initial stages of the home loan leaves you funds for paying the documentation fees and other associated expenses.
You also save funds to furnish or arrange the shift to the new home if you are buying a ready-to-move luxury apartment in Chennai.
You can also use the moratorium period to save up money to pay off upcoming EMI’s.
Taking a moratorium period is useful, especially during emergencies when you can divert your cash to where it is required.
How to avail a moratorium?
Of course, now that you planned on buying that luxury apartment in Chennai, you would want to check out the moratorium periods. But how does one go about voluntarily applying for one?
Each bank has a different set of terms and conditions for a customer to avail of the moratorium on their home loans. If you are still on the lookout for a financer, then shortlist those that offer you a moratorium early in the home loan tenure. But, be wary of fluctuating interest rates as the lender can increase the interest rates as soon as the moratorium period ends. Use an online EMI calculator to compare and see the impact on your EMI amount in case of fluctuating interest rates.
Once the financer is shortlisted, sit with them and ask them to take you through any changes that can happen to your EMI post the moratorium period. Check with additional charges incurred to avail of the moratorium period. One can also reduce the burden of home loans by choosing schemes that offer interest-only EMI’s during the initial period. That way, you can look for ways to boost your income or invest and get returns on the saved amount. You can begin paying the full EMI’s after the stipulated period. With the moratorium, you can lay your short term liquidity concerns to rest.
Financial management is a tricky pathway that needs patience to manoeuvre. At Lifestyle Housing, we understand the needs of our customers. Our sales, legal, and accounting personnel provide them with expert financial advice regarding home loans. We are partnered with reputed national banks with flexible home loan schemes to ease the process for you. Be it that gated community in Tnagar, or that 4BHK apartment in Chennai that you were eyeing, you can get the highest quality at the most attractive home loan offers with us.
