Applying for home loans is the most practical way to receive the necessary funds to purchase a property or your dream home.
Housing finance can simplify the task of funding the home of your dreams. With attractive interest rates and flexible tenors, one can incur popular credit solutions for all the big-budget real estate purchases.
Thus, when it comes to repayment of home loans, you need to be smart. Otherwise, the EMIs might put pressure on the finances. If you have financial means, consider reimbursement as soon as possible, which will help you be debt-free.
7 Ways To Pay Off Your Home Loan Faster
There are a few ways to reduce the burden of home loan EMI repayments. Here are seven different ways you can pay off your home loan faster.
1. Make Maximum Down Payment
Instead of taking the maximum loan amount, you should opt for leading down payments as much as possible, which can be determined using a debt consolidation loan calculator. You can also significantly reduce the principal loan amount and lower the EMI and interest burden.
For an effective home loan repayment system, clear the down payment within a range of 25% or more.
If you have some sort of investment that is not incurring the expected returns, you can avoid liquidating them and reduce the amount of debt in the future.
2. Pay Higher EMI
If your income has increased or you received a good increment after availing of a home loan, you can discuss it with your lender and select to pay more EMI, which would eventually decrease the home loan tenure.
This is a common way of repaying home loans faster, specifically when you are a salaried individual.
Even with a small increase in EMI, you can eventually reduce the loan tenure.
3. Take Advantage Of Emi Waiver Option
Sometimes, the lender announces lucrative loan offerings for borrowers who have consistently repaid the amount.
On the other hand, there are times when the lender rewards them by waiving off a certain number of EMI during the fag end of the loan tenure.
Therefore, if you are sure that you are careful about availing these claims, you can ask the lender how they will offset the discounts. Hence, these loans can have higher interest than the regular schemes.
4. Negotiate The Loan Terms With The Lender
This is another way you can reduce the home loan repayment faster. At times, the lender might not lower the loan's interest rate in line with significant changes in government policies.
Remember to be aware of the changing policies and regulations with lenders to revise the loan interest rate per the RBI regulation.
Thus, if you have a seamless loan repayment process, you can reduce the EMI burden and look for options.
5. Make Part Repayments
Well, the lender does not charge for a certain amount of part-payment, specifically on home loans with floating interest rates.
Even with part payments, one can drastically reduce the home loan amount. Thus, despite waiting, it is recommended to make home loan payments whenever you have a surplus fund, such as a gift, bonus, or another unexpected source of income.
Therefore, make sure that you check the pre-payment fee with your lender, as some of them charge and some of them do not.
6. Look For Tax Benefits
Generally, a home loan is very expensive when it comes with multiple tax advantages that assist you in saving a considerable amount of your money every year.
By availing the best dedication, one can save a lot of taxes. It has been over the years that these savings can add up and assist you in repaying the loan in small partial amounts.
This would reduce the remaining repayment time period.
7. Consider Other Charges And Fees
Remember to select a lender that offers a lower interest rate and charges lower fees.
When you select the lender, analyze the processing of different hidden and late payment charges, as they emphasize making a considerable difference in the amount.
While, late payment can also be a type of loan that might be a burden later, so try to make repayments on time. Similarly, delays can also create a negative impact on your credit scores, which can lead to rejection of your loan application in the future.
Select Your Loan Tenure Wisely
When you select a shorter repayment duration, you eventually pay off the debt sooner. Similarly, if you choose a faster loan repayment period, you also pay a lower interest rate.
Along with the techniques mentioned above, you should also select the loan tenure wisely. Repaying the home loan faster provides your surplus in the hands. It can be used to obtain goals, for instance, family vacations, retirement corpus building, weddings, or children's education.
When you avail of a home loan, it might be easy, but planning the repayment can be challenging. Thus, paying off debts early can feel rewarding and reduce financial stress.