Buying a home via loan increases lots of liabilities on a borrower. Not only, you have to save money for the EMI repayment but also have to manage funds for any emergency, daily spending or any other mishappening.
For instance, you have taken a home loan of Rs 25 lakh at 8.50 % rate of interest per annum for a time period of let say, 15 years then you have to pay a total of Rs 44, 31,328 during this period with an interest amount of Rs 19, 31,328 and the monthly EMI you have to pay is Rs 24,618.
Considering such higher interest rates and EMIs, many borrowers think to pay off the loan as soon as possible. This not only helps in decreasing loan EMI liabilities but also minimize money outflow. With this blog, we will tell you some easy tips that will help you in paying off your home loan faster:
Opt to Pay Higher EMI
If you are financially sound and have a strong backing of a good job, then you can opt for a higher EMI plan. This helps in reducing EMI repayment tenure as well as saves a good amount of money too. A higher EMI will also help in faster closure of loans after which you can save the additional money in building future assets.
At the same time, you can also increase the EMI amount with an increase in your salary. It will also stop you from unnecessary spending after a salary-hike.
Opt for Partial Prepayment Facility
A partial payment facility is another great method via which you can reduce your home loan EMIs as well as close it ASAP. The majority of the banks don’t charge any fees on partial payment of the loan amount. You can pay a good amount of money partially in a gap of a few years to reduce the EMI burden. Here, you can use any maturing fixed deposits, SIP, cash gifts from parents, bonuses, and incentives to pay off partial EMI amount in one go. For instance, in the initial period, the interest component is higher in the EMI. So, you can use the above options to reduce your principal amount as well as EMI interest.
Opt for Home Loan Transfer
A home loan transfer means shifting your home loan from one bank to another. Majority of borrowers opt for this facility to lower the EMI burden. Here, you can opt for a bank that offers you the same loan at a lower interest rate. You can either shift the entire loan amount or just the unpaid principal amount of the home loan to another bank. But, do remember that the facility comes with fees and you have a particular processing amount to the bank for any such transfer. So, calculate the overall cost beforehand and take the right decision.
Op to pay higher Down Payment
Usually, while buying a home, a buyer has to pay 20% of the money as a down payment. But, to save yourself from any additional EMI burden, you can choose to pay a higher down payment amount that gradually lessens your loan amount. However, this depends on your financial strength. Don’t go out of the way that leads to any distress in later stages.
So, follow these simple steps to reduce your EMI liabilities and make your future financially strong.