Be Smart and Prepay your Home Loans Faster

by Vinaya HS on March 25, 2017

in Finance

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If you had the option, you would never take loans. Isn’t it? After all, why would you want to pay extra interest? But in reality, we need to take financial help time and again. And more so for things that cost a lot, like houses.


But even when you have taken the loan, you would naturally want to clear it as soon as possible. And you can actually do that if you act smartly. Here are some tips that help you prepay your home loans quickly:


1 – Salary Hiked? Increase your EMI.

If you really want to clear your loan quickly, make sure that you increase the EMI with every salary increase. So suppose your original EMI at the start of loan was Rs 20,000 and your monthly salary was Rs 60,000. Now after few years, your salary would have increased. Let’s say it has increased to Rs 1.2 lac. At that time, it doesn’t make sense to just keep paying the same old EMI of Rs 20,000. You can easily manage to pay more. So with each salary hike, try to increase your EMIs.

2 – Prepay using some of your Annual Bonus.

Smart borrowers make sure that whenever they get their annual bonuses, they don’t spend it on unnecessary expenditures. They use a major part of the bonus to prepay the home loan.


3 – Be sensible about choosing between investing or prepaying loan.

Whenever you have surplus funds, you will find yourself taking the decision whether to invest or to prepay the loan. If the investment assures you of return that are more than loan rates, then you should invest. Else, it’s better to use that money (assuming it is not required elsewhere) to repay the loan and reduce the outstanding amount.




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