Home loans are a great way of fulfilling your aspiration of owning your own home. At the same time, it also feels lovely when you’ve finished paying off the loan. So, how do you make sure to pay off your housing loan as soon as possible without it impinging on your monthly budget?
Get ready for the good news. There are some practical ways to shorten the time taken for repayment, such as home loan insurance. Take a look at five valuable tips on achieving just that.
Opt for a Shorter Tenure
If you wish to free yourself of the debt earlier, opt for a shorter loan repayment tenure. The best banks offer up to 30 years to make the EMIs more affordable for you. However, it is up to you to choose the project that you are most comfortable with. Remember, the longer the tenure, the higher the cost of repayment. You can use an online housing loan EMI calculator to ascertain how brief a term you can afford easily.
Prepay of Your Loan
You can cut short your tenure and lower the interest payments by prepaying your loan. However, some lenders charge a penalty in case of early fees. So, make sure to check their terms and conditions carefully before choosing a loan.
Transfer the Home Loan to a Lender Charging Lower Interest
Always be on the lookout for better deals with lower interest rates. If you find a lender offering a lower interest rate, you can refinance or transfer your home loan to this lender. So, make sure to check the loan transfer rules of your chosen lender even before you apply for the loan.
Increase Your EMIs
If you have a good, stable income, you can try and get your EMIs increased. You can opt for an EMI increase of a small percentage every year and try to pay as much as possible. This will subsequently lower the total amount you need to pay and shorten your repayment tenure. Occasions such as a hike in salary are perfect times to increase your EMIs.
Make the Most of Your Tax Benefits
Those with an income of over ₹ two lakhs can get income tax benefits on the interest payment of home loans. This facility can trim down the money outflow by a considerable amount. For instance, people in the 20% income tax bracket can save around ₹40,000 in a financial year, while those in the 30% range can save up to ₹60,000 on their interest payments.
Innovative management of funds and planning can help you pay off your home loan much faster. Self-discipline is another essential attribute to ensure that you have a seamless repayment process. Besides, consider home loan insurance since it can ensure that the EMIs are paid even if you cannot deliver due to job loss or temporary/permanent disability.