Since ages home loans have been very beneficial to the buyers, as they not only help you buy a dream home but also help you save taxes. You must choose the right home loan if you do not want to face the hassles in the process.
EMI is probably the most important outflows from your monthly income, and it is always a great idea to try to lower the burden! The repayment of the home loan totally depends on your income and repayment capability.
Here are a few smart tips to close your home loan sooner than you thought!!
Make a higher down payment to lower the EMI amount
Repaying the EMI amount of your home loan takes over a decade. Reduce your principal amount of the loan, by paying large down payment. As the principal amount gets smaller, the interest payment lowers, as well as the EMI amount also gets smaller. It is worth for the long run and results in significant savings in EMI payments.
You may also want to know: How you can use your annual bonus to reduce home loan burden?
Partial prepayment of the loan
Prepayment of loan is one of the best ways to reduce your EMI for the majority of your tenure. It decreases your principal amount and saves you interest on later payments. You can also invest this money in mutual funds to get higher returns. This will help in increasing the partial pre-payment every year.
Got salary hike? Increase the EMI amount
Every year your earning increases as you get a salary hike. When it increases, increase the EMI amount as well, this will help to reduce your home loan, and close your loan faster.
Invest in mutual funds
One of the best ways to pay your home loan faster is, invest your savings in mutual funds. Mutual funds offer you higher returns, with 12% to 15% annualized returns, and is the best tool to close the home loan sooner.
Choose lenders offering lower interest rates on a home loan
Switch to lower interest rates home loan provider, which would result in payment of lower EMI. Ensure that you check on the processing fees or any additional fees involved for such a switch.
Partial payment on a home loan is good, but do not reduce EMI
When you choose to make a partial prepayment of your home loan, banks would ask you to reduce the EMI amount or to reduce the tenure. To close the home loan faster, it is advisable to choose reducing tenure of the home loan.
Are you buying a property without a home loan? Check out our previous article before you decide on it
Use your incentives and bonuses
For bulk payments of your EMI, use your incentives, and bonuses, which will help you in the long run to reap higher benefits.
“Few mistakes are so big in life that even if you pay EMI every day for entire life, still you cannot get rid of the debt”