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Home Loan: Introduction
A Home Loan is a long-term commitment that can extend up to 30 Years based on the lender’s terms and conditions. To get the best out of it, it is necessary to meticulously plan your Home Loan journey in terms of repayment and financial management. It is always a good idea to plan your repayment feasibly and become debt-free.
So, if you have recently applied for a Home Loan or are planning to apply for a Home Loan soon, here are some tips to effectively repay your Home Loan faster without compromising your finances.
How to Pay a Home Loan Faster: Useful Tips
Choose a Lender Offering Low Interest Rates
It is important to carefully study the market before applying for a Home Loan. Review the offerings by various lenders to know about their interest rates and other benefits. After checking all the lenders, pick a lender that offers the best loan terms, such as a low interest rate, flexible repayment tenor, and easy-to-meet eligibility criteria. A low interest rate translates into affordable EMIs, which can ease your repayment journey.
Choose a Lender that Allows Frequent Payments
Before you zero in on your Home Loan lender, ensure that the lender allows frequent payments above your EMIs. Making part-prepayments on your Home Loan will reduce the interest accumulation. Also, consequently, you can repay your home loan faster.
Borrow a Home Loan Amount That is Easy to Repay
Understand your financial capacity before taking a Home Loan. Exceeding the loan amount beyond your financial capacity can severely strain your monthly expense. If you choose a Home Loan amount that suits your budget, your repayment process will become easier. Getting a realistic idea of your repayment capacity is, hence, necessary.
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 pay a relatively high EMI with a short tenor, your interest outflow is limited. Apart from being able to settle your debt in a short duration, it also boosts your credit score and allows you to borrow other loans when the need arises.
Make a Sizeable Down Payment
Save enough money to make a sizeable down payment. Making a down payment instantly lowers your principal amount and significantly reduces your debt. Ensure that you’ve accounted for the down payment when you plan your home buying finances.
Opt for a Balance Transfer
In case you feel that your existing lender’s Home Loan terms are no longer favourable, consider opting for a Home Loan Balance Transfer and switching to a new lender. Switching lenders will enable you to benefit from a lower interest rate and a reduced tenor, basis eligibility. With such favourable terms, you can easily pay off your Home Loan faster.
Apart from the above-mentioned tips, here are some more suggestions to close your Home Loan quickly.
- Utilise profits from your other investments to quickly pay off your Home Loan
- Avoid taking other loans as the financial stress may be too heavy on you
- Build a systematic investment plan to easily clear your Home Loan