3 best ways to repay your home loan faster
Getting a home loan is very common in India, and research says that this will continue to increase for the next 5 years. It is believed that people will go for more home loans in the next 5 years, considering the fact that the interest rates in the bank have also been slashed, and there is also a demand for new investments from people. I have also bought my apartment 2 years ago and have been paying my home loan for the past 2 years. I also follow this trick, and it has been very useful for me.
Some of these might be very familiar to everyone, but people sometimes do all three and sometimes miss all three in spite of knowing the outcome of this. I used to wonder why the interest rates are very good, so why not just focus on other investments and leave the home loan as it is? But then I realize that only the early years of repayment is important because the setup is in such a way that most of the EMI value goes to the interest and not to the principle.
One extra EMI
This is a very common strategy. When we have 12 months of EMI to pay every year, if we take the efforts to pay an additional EMI every year, we will be able to reduce 3 years if it is a 20-year loan and if it is a 30-year EMI, then we might be able to reduce even more. For some regular individuals who find it hard to save money every month, pushing more towards paying one extra EMI is worth the effort in reducing the burden.
Pay more than EMI every month
This is another strategy where if we have a value of 60k as the monthly EMI, we can push a little hard and pay 70k every month to the loan account and this will end up poviding a great benefit where we will be able to pay 2 additional extra EMI every year and this value also happens every month so that an additional savings happen there too.
Part payments in bulk
During the early years of the loan, it is important to pay as much as possible. Many people, if they have taken a loan for the sake of tax saving, they usually pay most of the loan in the first few years and hold only a small amount of money, or about 25 percent of the entire amount, for loan reasons. So, part payment in bulk reduces the principal value by so much, and we will not know the difference until we do that.
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Small consistent efforts, like extra EMIs or bulk prepayments, can significantly accelerate the journey to financial freedom. A valuable read for anyone looking to optimize their home loan management!
These options are good and I wish Nigeria operates this way but we don’t
It’s on another level entirely
These are some really useful tips. I didn’t realize that even small extra payments, like one extra EMI a year or adding a bit more to the monthly EMI, could make such a big difference in reducing the loan time and interest. The idea of making bulk payments early also sounds very smart.
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STOPI have never take the home loan, but that is one thing that I learn, which is to pay more than you supposed to int he begining, as it helps you to reduce the principal loan, which will greatly help you reduced the amount of interest later. and also helps you pay the loan a lot faster.
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You have given some very good methods and they will help people a lot because people who withdraw some money in this way cannot pay it back from the bank, so that amount increases and their lives become full of problems.
Small extra payments can make a huge difference over time so this is a good one. You'll be cutting years off a loan and saving a lot on interest. Definitely worth it
From start actually, I will never recommend anyone to borrow any loan