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How to Pay Off Your Home Loan Faster? Here Are Few Tips

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  • How to Pay Off Your Home Loan Faster? Here Are Few Tips

  • Useful tips on how to pay off a home loan faster

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Home loans are long-term debts that extend from 2 years up to 30 years based on lender terms and conditions. However, living life in debt doesn’t really seem healthy as the principal home loan amount could increase on a long tenor with the home loan interest rate doubling or sometimes exceeding the principal home loan amount.  

Now, the only way to get yourself off the stress of such liability is to pay your home loan faster. If you can learn some good financial habits and do great planning too, you would clear your home loan faster. 

So, if you have recently applied for a home loan or you are planning to apply for a home loan and you are therefore thinking about the best way to repay your home loan faster, read on. This article offers great advice on the topic. 

For people planning to apply for a home loan, below are useful tips on how to pay off a home loan faster in India:

Useful tips on how to pay off a home loan faster

Choose a Home Loan Lender or Financial Service Firm Offering a Low Interest Rate

It is very important to carefully study the market before applying for a home loan. Without a rush, review the available banks and financial services to know about their interest rate and be sure to pick a lender with a low interest rate as this would avail you the opportunity to have affordable equated monthly instalments (EMIs). With this, you would be able to clear your home loan faster.

Pick a Lender That Allows Frequent Payments

Essentially, when planning to choose a home loan lender, be careful to choose financial services that allow you to pay more frequently even after the equated monthly instalments. We suggest this because interest on home loans is calculated daily, so making payments more frequently will reduce the interest which you will be paying over your loan tenor. Consequently, you would repay your home loan faster.

Borrow a Home Loan Amount That Is Easy to Repay

Before taking a home loan, be sure to understand your financial ability and do not go beyond it to save yourself the burden of accumulating interest on a home loan. This would make your home loan repayment process easier. Getting a realistic idea of your repayment capacity is a mandate.

Select a Short Home Loan Tenor

One of the best ways to repay a home loan faster is by selecting a short home loan tenor. Although you would pay a higher home loan EMI, the interest amount will be lower compared to a long home loan tenor. This will inevitably save you the stress of a piling debt amount. Apart from settling your debt in a short duration, it would also boost your credit score and allow you to easily borrow another home loan type when the need arises.

Make a Sizable Down Payment or Home Loan Prepayment

Save enough money to make a sizeable down payment, to make your life easier. Making a down payment instantly lowers your principal amount and significantly reduces your debt. This can be done by paying some percentage of the loan amount, say 20-30%.

Generally, the below points will teach you how to pay a home loan quickly:

  1. Make a home loan part payment: During your home loan tenor, you can make a part payment to reduce your principal and proportionately reduce your home loan equated monthly instalment, too. Once the EMI is lower, it would be easy to clear off your home loan quickly. You can calculate the home loan amount ratio to the part payment using a home loan part payment calculator.
  2. Do not delay or miss your equated monthly instalment: Sometimes, you may be financially constrained during your home loan tenor but try not to delay in paying your EMI if you really wish to clear your home loan faster. Delay in paying the EMI will incur an increase in the loan amount and the addition of unwanted taxes. This has a lot of negative effects which slow down your home loan repayment.
  3. Pay a higher EMI: Although paying a higher EMI is subjective, depending on several factors, it helps to get rid of any home loan repayment stress.
  4. Save money by cancelling unnecessary expenses: During a home loan tenor, you need to cut costs and other unnecessary expenses. The availability of funds will help you to repay your home loan quickly.
  5. Do a home loan balance transfer: If you are in the first half of your home loan tenor and you find the home loan repayment rate is no more favourable, consider doing a home loan balance transfer from your existing lender to another home loan financial service to enjoy low EMI.
  6. Use home loan tax refund: Under the law, taking advantage of home loan tax exemptions against principal repayment of your home loan is of great benefit as it is one of the best ways to repay a home loan faster.
  7. Rent out a portion of your house: Instead of leaving some part of the house empty, you can rent it out to increase your monthly income, with which you can sort out the home loan EMI. You can also partition a part of your house if you have a large area unused to rent out. Partitioning will enable the house to look large and appealing.

Other important tips that could help to pay off a home loan faster in India are highlighted below:

  • Utilize profits from your other investments to quickly pay off your home loan.
  • Avoid taking any other personal loan. The financial stress may be too heavy on you which may slow down your home loan repayment.
  • Build a systematic investment plan to easily clear your home loan.
  • If you are under financial stress, go for an extension in the home loan tenor.

One of the best decisions you can take is to apply for a Bajaj Housing Finance Home Loan. We offer the best home loan rates in India and give our customers amazing options that enable them to repay their home loans with ease. 

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