Home loans can be really helpful, provided you have a good repayment plan. A home loan mostly stretches up to 15- 20 years as the amount to be repaid, is quite huge. People most likely prefer a longer tenure so that they can opt for a smaller EMI. For any kind of loan, be it a home loan or any other, it is always better to pay the debt amount as early as possible so as not to pay any extra interest amount. The total interest on the amount increases as the tenure increases. If you are thinking the same way and want to know how to repay faster, here are some strategies you can follow.
Find a lender who provides a lower rate of interest
While you are looking for a lender or a bank to take a loan from, compare different institutions and choose the one that offers the lowest rate of interest. If, in any case, you did not find a lender who offers the lowest interest rate or find a lender with a lower home loan interest rate later in the future, you can even go for a balance transfer of the home loan to that lender. As the interest rate is low, it will be easy for you to pay the loan in the same period and with the same amount of EMI that you used to pay earlier for the balance transfer.
Higher down payment
Mostly the payment for a home loan is approximately up to 25% of home value. This factor can come in handy if you have sufficient savings and can pay more than 25% for the down payment. In that case, your loan amount will be reduced and the total interest rate amount will be lower. As a result of that, you will have to pay a lower amount as EMI.
Short loan tenure
It is an interdependent method of paying faster as when the tenure decreases, you would have to pay a larger amount in EMI. This option is also a great way to pay the loan faster for those who can manage to pay a larger amount as an EMI.
Partial prepayments are a great, easy and faster way to repay the home loan amount for the ones having surplus money. This strategy can help cut down the loan amount to a great extent and eventually lowering the overall interest rate amount on the loan taken.
What can be a better way to pay the loan amount faster than lessening the loan amount as much as possible. To lessen the cost of the house loan you apply for, you can use the various tax deductions that are provided under the Income Tax Act. Go through all the sections of the act and find the suitable one that can reduce your loan amount.
Home loan eligibility calculator
Home loan eligibility is a set of criteria that the institution uses to know the creditworthiness of the loaner who is taking the loan and it tells if the loaner will be able to pay the amount between what period and the EMI amount that is needed to be paid. Home loan eligibility depends on various factors such as age, income, credit score, tenure, and many more. The home loan eligibility calculator calculates this for both the institutions and for the individual. Take the help of the calculator and evaluate your eligibility before you apply for a loan. You can avail home loan eligibility calculator easily online.
These are some of the repayment strategies to pay the debt faster. Keep the strategies in mind and plan your finances accordingly.