Whether it is a city or a village, everyone wants their own house. Those who have low income and who do not have additional sources of income, they either buy a house or make a house by taking loans from banks. You have to pay interest on the home loan, which affects your savings. However, you need not worry, because home loan rates are being reduced by banks. But even after the rates are low, you still have to pay interest, which you can earn profit by investing elsewhere. Therefore, the home loan should be repaid as soon as possible. For this reason, through this article, we are going to give you information about repaying home loan and its installments at the earliest.
How to repay home loan quickly?
A home loan can be repaid quickly keeping in mind the below-mentioned things.
Choose the home loan term correctly
Low EMI is required to be paid for taking a home loan for a long period. You can easily repay a long-term home loan, but you have to pay more interest by reducing it. That is, you have to give several percent more of your loan amount to the bank. Determine the loan term based on your income, age and the bank’s ability to repay EMI and interest. Try to keep the loan duration to a minimum, this will save your money, which you will be able to invest in meeting your other goals. How do you determine the EMI of a home loan? You can determine the EMI of a home loan using the Indian Money Home Loan Calculator. To fix this, one only needs to enter the total amount of the home loan, the interest rate of the home loan and the term of the loan.
Increase the EMI of the home loan over time
Every year your salary increases. Increase the EMI of the home loan in the ratio in which your salary and income means increase, so that the loan duration can be reduced. By doing this you can save some amount of interest. Payment in excess of the fixed EMI acts like a prepayment. This reduces the loan tenure. Suppose you have taken a home loan of Rs 50 lakh at a rate of 8.5% for a period of 20 years. The EMI of your home loan is Rs 43391. If you increase the EMI of a home loan by only 10%, you can repay the home loan in just 9 years and 6 months.
Pay home loan in advance
Paying in advance reduces the home loan balance. This reduces the total interest payments and also the term of the home loan. As per RBI rules, banks cannot take penalty on advance payment of home loan taken at floating rate. Pay in advance to reduce the outstanding principal amount of the home loan. With this, the loan lender can save interest. Suppose you want to pay 2 lakh 40 thousand rupees in advance within a year. For this, you have to save 20 thousand rupees per month. If you pay in advance and still continue to pay at the same EMI, then the home loan will end before the fixed period. This saves a lot of interest in home loan interest.
Try to transfer the balance of home loan
If other banks are offering a home loan at low interest, then you can opt for home loan balance transfer. If the duration of your home loan is longer, then transferring the balance of the home loan does not save much. During the balance transfer, try to get the new loan term equal to the remaining period of the existing home loan. This saves you from paying additional interest. Compare processing fees and other charges before transferring home loan balance. If you have short term of your home loan, do not choose the option of home loan balance transfer. Choose this option only if you can save more interest by doing so.
Non-traditional ways of repaying the home loan
Save money in advance to prepay the home loan amount. You can save extra by planning your vacation and postponing travel abroad, reducing the use of credit cards, etc. If you have a home loan, avoid taking a personal loan. It has to be paid at a higher rate of interest. If you still need money after this, then instead of taking a personal loan, you can borrow from friends. You can also save extra for some time by reducing your expenses and repaying the home loan amount before the term.