Paying your home loan faster means you can save a lot of money on interest and late payment penalties. You can pay your loan earlier than the term. Early home loan payments do not involve any penalty. In fact, it is a good way to reduce your debt burden.
A few ways that help you repay the loan faster are:
- Home loan balance transfer
- Pay more down payment
- Choose the best deal
- Pay higher EMIs
- Never delay your payments
Let’s discuss each method in brief.
1. Home Loan Balance Transfer
Do you think your current bank is charging a high interest rate? Maybe they have an inflexible loan repayment plan. You can switch your lender anytime you want. Transfer your loan balance to another bank that charges a low interest and offers a longer repayment term. This way, you can reduce your monthly instalments and repay your loan conveniently.
Here’s what you get with home loan balance transfer:
- low monthly instalments
- low interest
- flexible repayment plan.
Use the home loan balance transfer calculator to calculate the total amount you can save by transferring your loan to a new lender.
2. Paying More Down Payment
Down payment is the 10-25% of the total loan amount a borrower has to pay to the seller. Banks have different down payment requirements. One way to reduce your debt burden is by paying more down payment. For example, if the minimum down payment requirement is 10%, you can pay 20% in advance. You can pay 30-35% of your home’s value as a down payment, depending on how much you can afford.
3. Choose the Best Deal
Never hurry when applying for a home loan. Research the market well and choose a lender that offers a home loan at the best interest rate. Home loans with low interest mean low EMIs and faster repayment.
So, compare the interest rates of different lenders and pick a bank that offers the best interest and flexible housing loan eligibility plan. You can change your lender if you find that the bank is charging high interest on the home loan. If the same deal is available at a low cost, switch the lender.
4. Paying Higher EMIs
You can pay higher monthly instalments on your home loan. This will help you get rid of the financial burden soon. Some banks offer a long tenure on a home loan, which means they give you a lot of time to repay your loan. It may look like a convenient option, but you should try to repay the home loan as soon as possible. Also, there are no restrictions for the loan prepayment. You can pay the loan in advance or before the tenure.
5. Never Delay the Loan Payments
Delaying your EMIs can increase your loan amount and affects your credit profile in many ways.
For instance, it:
- Adds interest penalty
- Reduces your credit score
- Affects your credit reports
It is best to make a habit of paying your monthly instalments in time. It will help you repay the loan sooner and reduce your financial burden.