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Home Loan repayment

When you take a home loan, you make a long-term commitment to the lender. This commitment could span a period of up to 20 years.

During this period, regular payment of EMIs through a convenient mode is very important for both you and the lender.

Regularity of EMI payment

·         Non payment or delayed payment can lead to:

o   A penalty of 2% on your EMI amount and

o   A negative record in your credit report generated by credit bureaus.

·         It is advisable to maintain an amount equal to at least two EMIs as balance in your account

Convenient modes of EMI payment

There are three modes through which you can make payment of the EMIs of your home loan.

·         Post-dated cheques (PDCs)

This is a mode of payment where you are required to submit signed post-dated cheques to the home-loan provider for a tenure specified by them.

·         Auto-debit

This is an electronic mode of funds transfer from your savings bank account to the home loan account. To avail of this facility, both these accounts should be with the same bank.

·         Electronic Clearing Services (ESC)

This too is an electronic mode of funds transfer from your savings bank account to the home-loan account; you can avail of this facility if your savings bank account and home-loan account are with different banks.

To summaries, ECS or Auto-debit is a convenient, safe and economical way of making regular periodic payments.

Courtesy:- ET dt:-1st July 2009