Easy Ways to Repay Your Home Loan Faster ! Repaying a home loan faster is a financial goal many homeowners strive for. By reducing the loan tenure or the overall interest paid, you can achieve financial freedom sooner. Here are seven strategies that can help you close your home loan early.
7 Easy Ways to Close Home Loan Early
Pre-Payments: Repay Your Home Loan Faster
Making additional payments beyond your regular EMI (Equated Monthly Installment) is a powerful way to reduce your loan tenure. Utilize any extra income, bonuses, or windfalls to make lump-sum payments towards your loan principal. This decreases the outstanding balance and reduces the interest paid over time.
Elevated EMIs: Repay Your Home Loan Faster
Opting for a higher EMI than the required amount can significantly shorten the loan tenure. While it might seem challenging initially, as your income grows over time, managing higher EMIs becomes more feasible.
Shorter Tenor: Repay Your Home Loan Faster
Choosing a shorter loan tenure from the beginning results in higher EMIs but reduces the overall interest paid. If your financial situation allows, select a shorter tenure while initially applying for the loan.
Balance Transfer: Repay Your Home Loan Faster
Consider transferring your home loan to a different lender offering a lower interest rate. However, remember to calculate the transfer costs and analyze if the reduced interest justifies the associated expenses.
Strategic Down Payment: Repay Your Home Loan Faster
A larger down payment at the time of purchasing the house reduces the loan amount and subsequently lowers the interest payable. This can also lead to smaller EMIs and less financial strain.
Timely EMI Payments: Repay Your Home Loan Faster
Consistently paying EMIs on time not only avoids penalties but also helps maintain a good credit score, making future financial transactions smoother and potentially unlocking better loan terms.
Capitalise on Tax Benefits: Repay Your Home Loan Faster
Utilise tax benefits provided on home loan principal and interest repayments under Section 80C and Section 24 of the Income Tax Act, respectively. This can save you significant money and, in turn, expedite the repayment process.
Summing Up How to Close Home Loan Early
Closing a home loan early involves a combination of financial discipline, strategic planning, and smart utilisation of resources. Assess your financial situation, set clear repayment goals, and explore the best strategies that align with your capabilities and objectives.
By adopting a mix of these approaches, you can potentially save thousands of dollars in interest and gain the freedom of owning your home outright sooner than expected. However, before implementing any of these strategies, it’s advisable to consult a financial advisor or mortgage specialist to ensure they align with your financial goals and circumstances. Remember, each strategy may have its pros and cons depending on individual situations.
Repaying a home loan ahead of schedule is not only financially beneficial but also provides a sense of accomplishment and security. The sooner you pay off your mortgage, the sooner you’ll have more financial flexibility for other investments and life goals.