Easy Ways to Repay Your Home Loan Faster

04 September 2023
4 min read
Easy Ways to Repay Your Home Loan Faster
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Did you know that one of the largest outgoes for an individual per month is EMI? If you've ever wondered how to expedite the journey to a debt-free life while owning your dream home, you're in the right place.

Slash debt, dodge penalties, and own your home sooner. 

Read on to learn how to pay home loan faster and break free from your home loan!

7 Easy Ways to Close Home Loan Early

To know how to repay home loan faster, read on these easy tips-

  • Pre-Payments

One of the easy ways is opting for pre-payments. Regularly make pre-payments, like one per year. These extra payments directly reduce your outstanding principal, helping you to repay your home loan faster.

This tip is suitable for those who do not want to carry the heavy luggage of a home loan for a longer term.

  • Elevated EMIs

The next tip would be opting for higher Equated Monthly Instalments (EMIs) that align with your financial capacity. This swiftly reduces your principal and interest, expediting loan clearance.

Remember, before you go for the higher EMIs, it is necessary to pay attention to your futuristic plans, too. Take into account all possible scenarios and expenditures that may cross your path.

You can even use a Home Loan EMI Calculator to compute your EMIs in no time.

  • Shorter Tenor

The next tip in the line would be choosing a shorter loan tenor. Selecting a shorter tenor can save you from the mental and financial burden that may linger if you opt for a longer duration.

While EMIs may be higher, you'll save significantly on interest over the loan's life. Remember, choose this option only when it fits your budget and appetite.

  • Balance Transfer

Another way to substantially reduce your interest payout over time is by considering a Home Loan Balance Transfer (HLBT) facility if you find better interest rates with other lenders.

This can be a helpful alternative if you intend to save money on interest. This can even be used if you are not happy with your current lender's service.

  • Strategic Down Payment

Make a down payment higher than 20% of the property value if you can afford it. This reduces your principal amount and interest burden, paving the way for quicker repayment.

Again, opt for this alternative only when it fits your bill.

  • Timely EMI Payments

Never miss an EMI, as it may cost you a fortune. Delayed or unpaid EMI payments attract a 1-2% penalty. It will reflect in your credit report as a defaulted payment and reduce your overall CIBIL score, making it difficult for you to avail of loans in the future. 

  • Capitalise on Tax Benefits

Leverage tax benefits available under the Income Tax Act 1961.

Section 80C permits deductions up to Rs. 1.5 Lakhs for the principal repaid, while Section 24(b) allows deductions up to Rs. 2 Lakhs for the interest component.

Under Section 80 EE, first-time homeowners can avail of tax benefits of up to Rs. 50,000 on interest payments annually throughout the loan tenor if the loan value is under Rs. 35 Lakh for a property worth less than Rs. 50 Lakh.

By availing of these tax deductions, you can reduce your tax liability and redirect the savings towards loan pre-payments, potentially shortening the repayment tenure.

Summing Up How to Close Home Loan Early

It is essential to know that fast-tracking your dream home ownership is achievable. Timely payments, higher EMIs, and utilising tax benefits put you on the path to shed your home loan swiftly.

Consider refinancing, seize deductions, and maintain discipline while considering your budget and other monetary plans.

Your journey to debt-free living and complete homeownership is in full swing. Embrace the brighter financial future that awaits you!

You May Also Be Interested to Know-

1.

Best Home Loan in India

2.

7 Tips to Increase Your Home Loan Eligibility

3.

How to Transfer Home Loan from One Bank to Another?

4.

How to Save for a House - Tips for Saving the Down Payment

5.

Things to Keep in Mind While Applying for a Loan

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.

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