A debt-free life is a dream of almost all of us. We want to buy houses and pockets are loaded. Well, it seems impossible, but you can make this dream come true due to some good financial habits.
The easiest and most effective way is to repay your mortgage and high-interest loans at the earliest. The debt burden on your shoulders will soon end by repaying the home loan soon. Apart from this, it will ensure that you do not have to spend money on penalty or late fees by avoiding loan default.
Why do you need to repay home loan early?
Home loans are a large liability for a long period of time, which is drawn from 15 to 30 years for most customers. During this long period, the principal amount that you have taken, it becomes more because the interest gets added to it. Even if you think that the loan interest rates are low, it makes sense to choose long term, but when interest is added on the amount you have taken for a long time, then it will be double or more than the amount you have borrowed. is.
So the best way to get rid of this burden is to repay the home loan soon. With a slight increase in EMI and some planning, you can repay the home loan as soon as possible and this can happen in a better way if the interest rates are low.
With these methods, you can repay the home loan at the earliest
Look ahead with the help of big banks
It is not always about big banks. Sometimes even small lenders can do wonders for you. This is possible because you will get some private facilities and some limited period offers as well. This can be long loan tenure, low fees and low interest rates.
You can get these benefits from small lenders and NBFCs:
– Loan term of more than 30 years.
– Fixed rate with 100 percent offset amount.
– Higher lending ratio.
– Reduced application and processing fees
Some lenders also allow payments to be made quickly. You have to see this when choosing a lender. If possible, you can ask for this facility and then pay even after paying EMI. It is recommended because the interest on the home loan is calculated daily. Paying less often reduces the interest.
Make partial payment
If you have extra money, then you can repay your home loan quickly even by making partial payment. When you choose floating interest rate home loans, there is no penalty or pre-payment charges on it. By making partial prepayment, your outstanding balance will be reduced and if it is done regularly then you can end the home loan soon. But to select it, you have to check this option with the lender while applying for the loan.
If not checked properly, you will not be able to take advantage of this facility during the entire period.
Make more than 20% down payment
If you pay more down payment of home loan, then the principal amount will also decrease, which will reduce the burden on you. As a result, you will have to pay less amount on interest and the entire amount. The debt burden is reduced by making more down payment as compared to other home loans. Another reason is that if the principal amount of your loan is less then repayment becomes easier.
Home loan refinancing can be helpful
If you have reviewed your home loan and found something affordable and convenient, then home loan refinancing can help you to get the best benefit. Negotiate the interest rates with your existing lender or another option is to go to a lender who is offering lower interest rates. You can also save a lot of money by this. But you do not have to consider only interest. Take help of home loan EMI calculator. Calculate the total borrowing costs with both lenders. Choose the one that fits right according to your pocket and requirement.
Tips to repay your home loan fast and save money:
Before applying for a home loan, save some money to make a down payment.
– Postpone non-essential travel plans.
– Reduce your credit card usage to a minimum.
– Make small or large partial payments.
– Take as much loan amount as you can easily repay.
– Avoid taking any personal loan.
– If not being used, then lease the property.
– Fill credit card bills on time.
– Freelancing to earn extra money.
– Use profits from other investments such as FDs or other policies.