5 Most Simple Ways You Can Pay Off Your Home Loan Sooner
Chapter #5 of Digital Loan Series by WhatsLoan (powered by DigiMusk)
Imagine taking a home loan at a very young age and saving till you compromise your life’s other interests to pay off your home loan? A general scenario, right?
It is always recommended that you consider taking the home loan at a very young age. Few of the other recommendations:
- Chapter #1. 10 Personal Things Banks Ask You While Determining Your Home Loan
- Chapter #2. 5 Necessary Documents For Your Home Loan Application
- Chapter #3. 20 Additional Hidden Charges On Your Home Loan That You Must Know
- Chapter #4. When Should You Buy A Home? 10 Point Checklist For Your Timeline
Sometimes youngsters take the home loan for 30 years, 40 years and so on. Do you realize that you end up paying heavy interests and a heavier total sum of the amount while doing so?
Whether you’re a salaried employee, or self-employed, or you’ve multiple revenues sources, you would not like to carry the home loan burden lifelong.
With such a fast phase of life, you may wonder whether to opt-in for a minimalistic lifestyle so that you can save more and pay off your loan? Or, save more and travel the world? Or, have the luxuries and comforts?
Since you’ve already taken the home loan, or planning to take the home loan, you should consider few options that can help you pay off your home loan earlier.
In this Chapter #5 of Digital Loan Series, we are walking you through the 5 most simple ways you can pay off your home loan sooner.
1. Consider Paying a Higher EMI
This will help you to get rid of the principal amount very soon. Obviously, you will have to manage your fixed bills and considerable expenses for a certain timeline, but once you are done with the principal amount, it will make you easier to pay off the entire loan before time.
2. How About Opting-In For Partial Payment?
Partial payment helps you in paying most of the principal amount and also helps you get lower interest rates. See you get 1+1 offer on this. And, what would be better than paying EMI at lower interest rates?
3. When your income increases, increase your EMI
Yes, don’t jump in and spend your increased salary on your other hopeful assets. It is recommended that you first get rid of this big loan and then consider spending on any other asset. So when there is a hike in your income, increase your EMI.
4. Transfer Your Loan To NBFC
Transferring your loan to a different entity where the interest rates are lower make sense for you to lower down your EMI and be capable enough to pay off your loa before time.
- NBFC = Non-Banking Financial Company
5. Reduce Your Loan Tenure
There are times when the interest rates go lower. If you’re on a flexible scheme, you can reduce your loan tenure. Reducing loan tenure is better than paying a low-interest EMI because you can save considerably higher if you can pay off your loan early.
Let’s say at present you have a loan of INR 35,00,000 at an interest rate of 10% for 15 years. You would be paying a monthly EMI of INR 37611 (approx).
Suppose if 5 years later, the interest rate goes lower to 8%, and you consider a low interest EMI, you would be paying around INR 33447. This means a saving of around Rs 4164 monthly. But if you consider reducing your home loan tenure to 10 years, then you will be paying your last installment in the 105th month, this means you will be saving on EMI for 15 months (120–105).
By the way, do you know that we have built a Digital Loan Key, a unique financial identifier, that can retrieve your legacy documents (such as your Aadhaar card, pan card, bureau score, 10th mark sheets, birth certificate) online and enables you to get it verified within minutes and share with the lenders in one click.
Digital Loan Key
We have launched it for the builders and we’re launching it soon for you. Sign up below to get it first.
The mission of this Digital Loan Series is to educate you and make you ready for the loan anytime!
If you happen to read this article, we assume you are somewhere in between of thinking for borrowing/purchasing a house. We recommend you to follow the series, or if you have any immediate query, reach out to us at firstname.lastname@example.org.
We also recommend you to share this with your people, your network, and younger ones so that they can be loan ready for the right time!
Signing off (till we write the next chapter to you on next Wednesday)