Owning a house is a great pride in itself. However, a big portion of salary going to the bank every month may not be a pleasant feeling for any household. A Home loan allows you to live in a house that is registered under your name, but is that house really yours? All you own is a nameplate hanging outside the main door and photocopies of sale deed and registration slips. Needless to mention the mental strain associated with the massive EMIs. Typically people take a home loan for a period of 10 to 15 years. Sometimes, to lower the EMI, people increase the loan tenure up to 20- 30 years. However, as these long years pass by, so does your youth. Therefore, the sooner you pay off your home loan, the sooner you have an own roof over the top in the true sense.
• Make partial payment whenever possible
Until last few years, this option was almost avoidable as you would have ended in paying a huge penalty for prepayment of your loan amount. But now it is possible with RBI’s monetary policy announcement in June 2012 that directed banks and other financial institutions to waive off any sort of penalty associated with the prepayment of loans. You should keep depositing in your home loan account apart from normal monthly EMIs. Extra money can come in the form of a festival bonus, arrears, incentives, a gift from relatives on special occasions, maturity of existing deposits etc. So instead of renovating your house or buying a new phone or furniture, invest that money towards repaying your home loan account. This idea might seem troublesome to you in the first go but it will help you save more.
• Reduce the tenure and not EMI
After partial payment, the bank will give you option of either reducing the EMI or loan tenure. It is not advisable to reduce the EMI, rather one should aim to finish the loan as soon as possible. Keep the EMIs as it is and you will pay off the loan faster.
Additional Read: How Can A Home Loan Calculator Help You Plan Your Finances Better?
• Switch to the bank that offers lower interest rate than yours
You should be aware of the latest market trends and home loan interest rates. There may be a bank that is offering a significant lower interest than your current lender. Transfer your home loan to that bank after carefully going through their terms and conditions. However, it should be noted that you will be again asked to pay the processing fee of the new lender. So, your decision should be well researched and carefully thought of.
• Take a look at your savings
It’s time to ponder over all your savings and investments. Savings like PPF, EPF, post office deposits and some fixed deposits might not give you more interest than what your home loan is demanding from you. Then, what is the point of keeping such deposits when you are paying more interest to someone other? However, you should always keep the surplus amount for any emergency.
• Consider reworking on the EMI structure
It may seem impossible but even a slight increase in your EMI might help you in ending your loan amount sooner than what is expected. So, if you simply add one thousand, it will go to your principal account and will help you in finishing off your loan amount.
If you are determined to pay off your home loan faster, you can do it by the careful and planned execution of the above ideas. And don’t forget, you will be the real master of your house only when you are done with repayment of your home loan.
Additional Read: How to Reduce Home Loan EMI – Tips and Tricks