If you are a fresh borrower, you may not have fresh choice as you signed up for a home loan simply because you fell short of funds for the property investment. As a result, those who have signed up for a home loan less than a year ago may not have much choice except to generate surplus. One of the options is to set aside the excess cash on a regular basis so that the same can be used up for pre-paying the loan at regular intervals. For instance, those who have signed up for a loan of Rs 20-25 lakhs can look at repaying at least a couple of lakhs so that the EMI doesn’t shoot up in a big way. This may not be possible right away and hence, one should make it a habit to set aside the sum for repayment in a systematic way. For such investments, look at short term debt products such as short term debt funds which allow you to accumulate corpus at regular intervals. Since interest rates have gone up and are likely to remain high for the next 9-12 months, these schemes might allow you to earn double digit returns. We wouldn’t recommend fixed deposits as interest earned from FD is taxable. Also, the interest from FD is attractive only when the tenure is long.

In the case of loan borrowers who have been servicing their loans for more than 3-4 years, a review of plan is needed. The immediate option is to check out whether your banker is offering the best deal. If your banker has not increased the rate after the credit policy, stay with him. Or else check out the deals offered by other banks. Some of the nationalised banks like Canara Bank, have decided to stick to their old loan rates. Compare this with your current home loan rat.the improved cash flow is sure to have made loan repayment less painful and now, you could probably be even comfortable with an additional cash outflow. In such a case, shift your loan account to a new lender with a lesser repayment period as this offers a better deal. Many banks even have the habit of offering discounts to their existing borrowers when such alterations are made. So before shifting the loan to another bank, have a chat with your existing lender and make him give you the best deal.

	Lower interest rate
	Consolidate 2nd mortgage loan
	Lower loan term
	Lower monthly payments
	Payoff other personal loans and debt
	Take cash out from equity

In the previous column, we had a look at the home loan scenario with interest rates turning volatile. In fact, interest rates have turned volatile to such an extent that those who sign up for home loans can’t sit back after signing up for it. For those who thought they could settle down with their EMIs, it’s not time to relax. A week ago, leading home loan lenders like ICICI and HDFC delivered a fresh blow with yet another round of rate hikes. As a result, home loan rates which were at around 8-9% three years ago, have risen by as much as 40-50% and are within kissing distance of 15%. Should you still carry that home loan burden for tax benefit.