Want To Pay Your Home Loan Faster? Follow These 7 Ways
Paying off your housing loan faster makes sense in many ways: you’ll save on interest and can enjoy your assets earlier.
So, how can you pay off your home loan faster? Here are seven ways in which you can pay your home loan faster.
Select Lender Who Offers Lowest Home Loan Interest Rate
The best way to pay off a home loan faster is to select a lender who offers the lowest home loan interest rate. This will reduce the amount of money paid in interest over the life of the loan.
Individuals with good credit scores can ask the lender to reduce the interest rate on their EMIs. This will reduce the burden of housing loans and help save money for future repayments.
Make Extra Payments toward Your Loan
A straightforward way to clear the home loan faster is to make extra payments toward your loan. Every additional payment you make will go directly toward your loan’s principal, and the sooner you pay off the principal, the less interest you’ll pay overall.
Pay Large Down Payment — Around 30%
A large down payment reduces the size of the loan and saves money in interest payments. You can save money by paying a down payment of 30% or more for your home loan.
A large down payment can also help in securing the lowest home loan interest rate. Making a large down payment on a housing loan will help in paying it off faster as it reduces the loan tenure automatically.
Pay Higher EMI Towards Your Home Loan
If you have the extra cash, paying a higher EMI towards your home loan is one of the best ways to pay it off faster. By doing this, you will be able to reduce the overall tenure of your loan and save on additional interest payments in the long run.
Before you decide on this course of action, make sure you have enough buffer in your monthly budget to afford the higher EMIs comfortably.
Once you are sure that you can afford it, contact your bank or housing finance company and request them to increase your EMI amount.
Never Skip Any Monthly Installments
Skipping even a single monthly installment can jeopardize your entire loan repayment process. Due to this, you have to pay a late fee, and you’ll also end up paying more interest in the long run.
Furthermore, your CIBIL score will take a hit, making it harder to get approved for future loans. So, be sure never to skip any monthly installments!
Use Tax Redemption Benefits
You can claim up to Rs. 1,50,000 as an income tax refund against your Home Loan Principal Repayment under Section 80C of the Income Tax Act.
You can pay housing loans faster and shorten the loan tenure using that amount.
Under Section 24 of the Act, you can claim a deduction of the interest payment on the home loan up to Rs. 2,00,000 if the house is constructed within five years. If it takes more than that, you can claim Rs. 30,000.
Sell Unwanted Items and Use That Money To Pay Loan
It can be quite difficult to come up with extra money to put towards a home loan, but there are a few easy ways to do it. One way is to sell unwanted items. The money you receive through selling those items can be used in loan repayment, which will help you pay it off faster.
This tip can benefit you more if you are considering selling something big, like a car or motorcycle, because the proceeds from that sale can add up! These are depreciating assets, and selling them is the best option when they are no longer in use.
Summing Up
If you’re looking to pay off your home loan faster, you can do a few things. These include making payments of EMIs on time, using tax redemption amounts, paying extra EMIs, choosing short loan tenure, etc. By following these simple tips, you can pay off your home loan faster and save money in the long run.