How to Repay Housing Loan Faster: 5 Easy Ways to Know

Applying for a home loan can be an excellent way to secure the funds needed to purchase your dream home. However, opting for a loan is a long-term commitment, and repaying it can be cumbersome. This is why many individuals choose to manage their home loan repayments through Equated Monthly Instalments (EMI), as it simplifies the repayment process. It's important to note that the longer the repayment term, the more interest you will pay. Therefore, it's advantageous to pay off your home loan as quickly as possible. In this article, we will discuss a few steps on how to repay your loan faster.

5 EASY WAYS TO CLOSE HOME LOAN FASTER

Here are 5 tips on how to close the home loan early:

Choosing a lender who provides a lower interest rate:

When selecting a lender for a home loan it is important to evaluate the interest rates they offer on the loan. Opting for a loan with a lower interest rate can be a wise decision. If you feel that your current lenders' interest rates are high and do not align with your financial goals, you can always opt for a balance home loan transfer. By securing a lower interest rate, you can easily accelerate your home loan repayment process, even if you continue to pay the same amount of EMI.

Putting down a higher downpayment amount:

Increasing your down payment can significantly reduce the total amount of loan payable. Typically, lenders accept up to 25% of the loan amount. However, if your savings allow you to put down more than 25% as a downpayment, you could significantly lower your loan amount. By increasing the downpayment, you not only secure a loan amount but also reduce the interest rate and lower your EMI amounts.

Aim for a shorter tenure:

Another way of repaying your home loan earlier is to opt for a shorter loan tenure. It is crucial to recognize that in doing so you would be paying a higher EMI amount.

Partially pre-paying your loan:

If you have excess funds, making partial pre-payments could potentially help you reduce the outstanding loan amount and thereby the interest amount.

Benefiting from tax exemptions:

Leveraging home loan tax exemptions can significantly reduce your taxable income. You can claim up to ₹1.5 lakhs deduction on the principal and up to ₹2 lakhs on the interest paid annually under Sections 80C and 24b, respectively.

Conclusion

Understanding strategies like selecting low-interest lenders, increasing down payments, shortening loan tenures, making partial pre-payments, and utilizing tax benefits can help you understand how to repay housing loans faster and efficiently. By adopting these methods, you can significantly minimize both the loan's tenure and overall financial strain, moving closer toward ownership and financial freedom.