Paying your home loan EMIs will always be a commitment over a lengthy period of time, possibly up to 30 years. Over the years, your financial condition could undergo significant adjustments. Therefore, it is generally advised that you have some room for flexibility when you sign a contract with your lender. Prepayments should be considered in order to pay off your loan as quickly as possible, although EMI choices should still be considered when choosing a lender. Let’s examine how you can pay off your house loan’s EMIs more quickly:
Higher down payment
Depending on the size of the down payment you make when applying for a loan, your principal amount will be reduced greatly. For instance, you can use a down payment to cover at least 20 to 30 percent of the loan’s total amount. When you make a larger down payment, your debt obligation immediately decreases; you will spend less on the interest component and your overall repayment will be lesser.
Initiate a few part-prepayments
During the term of your home loan, you can make a few partial prepayments to lower both your principal balance and your subsequent EMIs. When your EMIs decrease, you’ll be able to make on-time payments and pay off your home loan faster.
Shorter home loan tenure
You will pay more home loan EMIs with short tenure, but your loan will be paid off sooner. In comparison to what you would pay if you choose a longer-term, the interest amount you would ultimately pay will also be smaller. You’ll be able to borrow more money again if you pay off your loan quickly should the need arise. Additionally improving your credit score.
Choose a lender who offers a lower interest rate
Be sure to conduct a thorough market analysis before choosing a lender. Please check all lenders’ details and contrast their interest rates in accordance. Choose a lender with the lowest home loan interest rate to pay off your debt quickly and with manageable monthly payments. Consider starting a home loan balance transfer if you are currently paying a high home loan interest rate in order to receive lower interest rates and other advantages.
Do not default on your monthly EMI’s
You will be impacted by not making your EMI payment in a number of ways. Any applicable taxes on top of a penal interest rate of 2 percent will be assessed for the delay. Your credit report will reflect the missed payment, and your CIBIL score will drop. It can be challenging for you to obtain credit in the future if your CIBIL score declines. Future credit inquiries by lenders may result in the rejection of your loan applications.
Home loan options with EMI waiver schemes
When you pay your EMIs on time, some lenders provide you an incentive by waiving a certain number of them. To see if it is competitive with other lenders, you must compare the processing charge and other relevant terms.
Link your home loan to a bank account
A current account will be opened and connected in a few banks in order to sanction a home loan. Your cost of interest will be reduced by the amount you hold in this current account. Your obligation to pay interest on your loan will decrease in proportion to the excess money you have kept in your current account.
Consider other fees and charges
You should pick the lender that provides a home loan with a reduced interest rate as well as lower other fees and charges. Because they can significantly affect the cost of a loan. This include processing costs, late payment penalties, and other hidden expenses. So this should also be taken into account when choosing a lender. In order to prevent late payment fees, make sure you pay your EMIs on time as well. All loans have extremely hefty late payment penalties. Additionally, late payments may lower your credit score, which could cause future loan applications to be denied.
Use the simple strategies described in this article to pay off your home loan more quickly. Faster loan repayment leaves you with extra cash in your pocket, which can be used for various purposes. Your credit score will suffer if you don’t pay your home EMIs on time, making it harder for you to borrow money in the future. Therefore, instead of trying to avoid this situation, you should always look for solutions.