I want to close my home loan in lesser number of years. How to repay home loan quickly?
Here are some ways in which you can pay off that Home Loan quickly.
Pay A Higher EMI
If it is financially convenient, you must opt for a higher EMI than the one calculated by the lender. Paying a higher EMI greatly reduces your total tenure thereby resulting in a lot of savings over the entire time-frame. The burden of paying EMIs for a longer period also gets minimised. Once free from the EMI cycle, you can always divert the money into corpus building measures.
Go In For Partial Pre-payment
As there is no penalty for pre-payment of home loan whether fully or partially in any bank, you should make full use of this facility from time to time to keep repaying it partially. Remember that in the initial period the component of interest in the EMI is higher and gets reduced with the passage of time. Thus pre-paying any amount in the initial phase of the loan gives you a double benefit. It not only reduces your principal amount but also brings down the total interest payable. Use your bonus and incentives, maturing Fixed Deposits, cash gifts from parents, friends and family or any other one-time income for partial pre-payment. You can also devise your own systematic payment plan to help you make such payment.
Increase EMI With An Increase In Your Income
In normal circumstances, your income increases over a period of time. This increase in income can systematically be used to increase your EMI. This not only helps you to repay the loan faster but also helps check excessive and unnecessary spending after an income-hike.
Shift Your Loan To A Bank That Charges A Lower Interest Rate
Various lenders can have varying interest rates at the same point in time. You can use this differential to your advantage by shifting your loan to a lender with lower interest rate. This can be done through ‘Balance Transfer Schemes’ of banks whereby the entire/major unpaid principal of home loan amount is transferred to another bank for a lower rate of interest. While doing so keep in mind that the new bank will charge fees for such a transfer and that there might be a processing fee for such a transfer. A smart way is to pre-calculate the benefit of lesser interest versus the overall cost of loan transfer.
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