Ways to close home loans faster
For any homeowner, it’s a dream to own a home without any loan. Even if they need to have a home loan, repaying it as soon as possible becomes the first priority. The payment of EMI takes years to complete. The home loan interest increases the overall cost of the property in J.P nagar as the interest rates are over 10% which sums into a great amount to be paid. So, in this need of wanting to close the home loan sooner, one must follow some very basic and important steps which finally proves to be highly beneficial.
They are:
Partial prepayment of the loan in a synchronized manner:
The basic idea is that we can plan now to do pre-payment in the new year and work towards saving for this from day 1. Say, if you are intending to do pre-payment of INR 120,000 in next year, start INR 10,000 savings from January itself every month. This investment of money can be done by means of recurring deposit for next 12 months and do the partial pre-payment of the loan by the end of December. This money can even be used in short-term mutual funds thereby increasing the funds every year.
Incentives / Bonus can contribute to partial pre-payment:
Many of us work in MNC companies and get yearly variable pay during April/May. This amounts to a significant amount as it would be approximately 10% of the yearly salary. Without wasting this amount on general expenses, it can just be paid as the partial pre-payment of the loan. This would help you to pay your home loan faster and would be a great relief.
Investment in Mutual Funds:
One of the best ways to pay home loan faster is to invest your savings in equity and balanced mutual funds. You have the option to choose a required plan and do the SIP every month. As mutual funds offer a high percentage of annualized return rates on the investment, it can be the best option for closing your home loan faster and sooner.
Don’t reduce EMI:
Whenever you do the partial pre-payment, banks would give a choice either to reduce EMI or to reduce the tenure of the loan. Best way to close your home loan faster is to choose to reduce the tenure of loan and not reducing the EMI. This way your monthly commitment would still remain same. If you choose to reduce the EMI it will again result in the same time period and you will receive no benefit and hence it is beneficial to not to reduce the EMI.
Increase EMI when the income grows:
​
Every year, employees would get salary hikes. For businessmen, income increases. One of the most elegant and preferred ways is to increase the EMI when there is an increase in your income. With an increase in the salary, one must make an increment in the EMI also as the amount paid will be more for the same period. This will result in reducing the loan tenure and thus helps to close the loan sooner.
The above methods when adopted can be very beneficial. These 5 tips can very well take care of the idea of paying off the loan sooner. One just need to follow them and can get rid of the loan sooner.
