6 Easy Ways to Repay Your Home Loan Faster

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4 Min 11 Mar 2024

Highlights

Overview of a Home Loan
Tips to Repay Home Loan Faster

A Home Loan is a long-term commitment that can extend up to a few decades based on the lender’s terms and conditions. For instance, Bajaj Housing Finance offers a Home Loan tenor of up to 40 years. Thus, it is important to plan your home finance journey in terms of repayment and financial management.

So, if you have recently applied for a housing loan or are planning to apply for one, here are some tips to effectively repay Home Loan faster without compromising your finances.

Follow These 6 Useful Tips to Repay Home Loan Faster

Here are a few tips to pay off your Home Loan quickly:

1. Choose a Lender Offering Low Interest Rates

Review the offerings by various lenders to know about their interest rates and other benefits on Home Loans. After checking all the lenders, you can pick a lender that offers the best loan terms, such as a low interest rate, flexible repayment tenor, and easy-to-meet eligibility criteria. A low Home Loan interest rate can translate into manageable EMIs, which can ease your repayment journey.

Additional Read: Tips for Securing a Better Interest Rate on Home Loan

2. Choose a Lender that Allows Frequent Prepayments

Before you zero in on your Home Loan lender, ensure that the lender allows frequent prepayments above your EMIs. Making part-prepayments on your home finance will reduce the interest accumulation. Also, consequently, you can repay your loan faster.

3. Borrow a Home Loan Amount That is Easy to Repay

If you choose a Home Loan amount that suits your financial standing, your repayment process can be easier. Thus, it is important to understand your repayment capacity before availing of a loan.

4. Select a Short Home Loan Tenor

One of the best ways to repay a Home Loan faster is by selecting a short Home Loan tenor. Although you pay a relatively high EMI with a short tenor, your total interest outflow is less. Apart from being able to settle your debt in a short duration, it also improves your CIBIL score and allows you to borrow other loans in the future hassle-free.

Additional Read: How to Pick the Best Home Loan Tenor that Suits Your Budget

5. Make a Sizeable Down Payment

Save enough money to make a sizeable down payment. Making more down payment lowers your principal amount and reduces your debt. Ensure that you have accounted for the down payment when you plan your homebuying finances.

6. Opt for a Balance Transfer

In case you feel that your existing lender’s Home Loan terms are not favourable, you can consider opting for a Home Loan Balance Transfer and switching to a new lender. This can enable you to benefit from a lower interest rate and a changed tenor, basis eligibility. However, it is more beneficial to transfer your Home Loan at the beginning of the loan tenor to save more on the total interest outgo.

Conclusion

You can pay off your home loan faster by following these steps. By managing your home loan effectively, you can set yourself on a path towards a more rewarding and fulfilling financial journey.

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How to Repay Home Loan Faster: FAQs

Buying a home is a dream for many. While it builds an asset, a major chunk of your money in the form of EMIs can financially affect you. As it involves a significant financial task, one of the strategic ways to save money is to repay a Home Loan faster or earlier. You may choose to repay partially or the entire loan amount depending on your financial obligation. Repaying a Home Loan faster helps reduce the total interest charges. It makes you debt-free early. It also helps you pay principal amount faster.

Prepaying Home Loan can potentially help you save interest rate. Opting for a shorter tenor also reduces your interest rate. A shorter tenor helps you repay the principal amount faster. As interest is basically calculated on outstanding principal component, quick payment of principle amount results in lower interest payout. Also, if possible, try to pay surplus EMI amount, as it will potentially unburden your interest rate and principal outstanding. Doing a thorough research in terms of low interest offerings before availing of a Home Loan is advisable.

Prepaying Home Loan can potentially help you save interest rate. Opting for a shorter tenor also reduces you interest rate.

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