You may think that the worst is over once your loan has been finalized and your new home paid
off. However, the real struggle begins only after that. Once you have acquired a loan and secured
your dream home, you should also think of repaying the loan. This task is not easy as it requires
years of careful financial planning which if done poorly, can land you in trouble. If you are
looking to get rid of your home loans quickly and effectively, these tips will help you.
Fund management: An important role
When it comes to home loan repayment, you have to consider changing many expenses and
ensuring that you have adequate savings in addition to the EMI amount to live a comfortable
life. Once your loan has been paid for, you should sit down and analyze your savings and
investments. It is not sufficient to simply rely on your job earnings to pay off a loan. Determine
the most profitable investments and try to generate more wealth in the coming years, making
repayment an easier process. If you find that certain aspects of your investments aren’t
performing as well as you hoped, channel them to better avenues.
How to repay your loan faster
Debt is something most of us want to live with but let’s face it – homes are more expensive than
ever. Taking out a home loan is almost inevitable. But one way you can make this process better
and easier to find ways to pay back your loan faster. There are three primary ways to make your
EMIs count and reduce the loan tenure:
1. Increasing EMI
2. Pre-payment
3. Lower interest rate
Increasing EMI
One of the easiest options to close your loan faster is to increase the EMI. If it is possible for
you to divert any addition funds to repay your loan, you can reduce the terms significantly. For
example, if you take out a loan for Rs 30 lakhs with a repayment term of 20 years, your average
EMI will range around Rs. 28,950. If with slight adjustments, you can add even a measly Rs
2,300 per month, you can dramatically reduce your loan period by 5 years, with a 15 year term.
This is why it is important to invest your money in recurring deposits or insurance plans as they
can supplement your current EMI and reduce your stress of paying back.
Partial pre-payment
Repaying your loan ahead of time with unexpected monetary surges is a great way to reduce
your loan. If you receive company bonuses, gifts, profits from shares, selling of property or
closing down deposits, you can channel these earnings into your loan and pay back your loan
ahead of time. These one-time payments, though rare, can reduce the debt radically.
Lower interest rates
Before you decide on a loan, ensure that your survey multiple banks and financial institutions
and choose plans with lower interest rates. By switching to loan terms with lower interest, you
can easily reduce your repayment course significantly.
