Pre-paying your Home Loan is good for your Credit Score and will also reduce your EMI. You can use your funds to pre-pay your loan. It is best to not to go for loans like Personal Loans to prepay your other loans. Here’s an example of how prepaying your Home Loan will help.
You have a 20 year Home Loan for Rs. 60 lakh. 6 years have already gone by. You receive a Rs. 2 lakh bonus. Let’s say the interest rate is 9.5%. Assuming you have no other loans and are enjoying tax benefits on the loan, it makes sense to prepay your Home Loan. This is because you will save Rs. 7,50,948 of interest. Not only that, your Home Loan tenure will go down by 1 year and 6 months.
We would be able to give you exact details if you provide us with the loan amount, interest rate and the tenure.
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