How do I Improve My Home Loan Repayment?

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Jul 23 '22 | By ShubhamHousing | 367 Profile Views | support user content | Comments: 0
How do I Improve My Home Loan Repayment?

Home loanshave the longest repayment terms compared to other types of loans available in the market. The repayment period can be extended up to 30 years. This loan will not only help you get your home, but you will also benefit from taxes. But it also affects your current and future financial situation. So, you should pay it as soon as possible. If you want to pay off a loan against property early, here are some smart management tips. 

Choose the shortest possible term for a home construction loan. The term is considered an important factor if you want to terminate your home loans early. So that your loan can be paid off quickly, you can choose the shortest possible building loan period. However, the shorter the payment period, the higher your EMI amount will be.

Therefore, before deciding on the loan term, you should carefully weigh all the pros and cons as well as your financial situation so that you can pay your EMI on time and also cover your important expenses. In the long run, you will have to pay a lower EMI so that you can repay the loan amount more conveniently. At the same time, there is also a long-term disadvantage that you will have to pay more interest during this time.

Use Shubham's Housing Loan EMI Calculator to find out your Home Loan EMI before you claim it. Enter the loan amount, interest rate and term and find out how much EMI you have to pay for the loan.

Increase your home loan EMI over time

Most banks/credit institutions usually offer home loans with maturities of up to 30 years. Such a long period of time can also increase the borrower's income, especially for employees. If you work or have a job that can increase your income over time, try increasing your home loan EMI gradually. Prepaying a home loan through a higher EMI reduces the amount you owe on the loan.

If possible, pay off your home loan first

Timely home loan payments are a good way to pay off your loan early because it shortens the repayment period. It also saves the customer the entire interest payment. Historically, banks/credit institutions have made advance payments or imposed foreclosure penalties on home loans at adjustable rates. However, under RBI guidelines, banks and HFC/NBFC can no longer impose penalties on prepaid home improvement loans and other personal loans. Therefore, borrowers should try to pay off their home loans whenever they have cash to spare. However, this prepayment should be made if you have extra cash left over after meeting your vital financial needs.

Choose balance transfer for lower home loan interest rates

Another way to close your home loan early is through Home Loan Transfer. This way you can transfer the unpaid loan amount to another bank/credit institution that offers lower interest rates for home loans. However, before doing so, you should pay attention to the following points about the new bank/credit institution:

  • When a new bank/credit institution offers a lower interest rate than the current home country's interest rate

  • Processing fees and other fees associated with loan transfers must not exceed loan transfer savings

  • If the existing bank/credit institution has rejected your application for a mortgage increase, the new bank/credit institution will give you approval.

  • Extending your home loan within the first few years of the loan term saves you further interest payments. You may not extend the term of your loan. That's because borrowers typically make most of their interest payments in the first few years of their loan. If so, you should opt for the longer-term option, may have to pay a higher interest rate, and won't save much with a home loan balance transfer.

However, if you have a heavy financial burden, you can extend the term of the loan because it reduces the EMI burden on you. And with that, you can also prepay your bonuses for employment, growth, any kind of business gain, or another capital gain. Only choose a balance transfer home savings loan if it will help you make significant savings or reduce your financial burden. You can take the help of home loan eligibility calculator on the Shubham website.

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