How to Pay your Home Loan Faster?
Mar 24, 2020 Home Loan
Buying a house while taking a home loan is easy, but it also makes you stay burdened under the debt until the debt has been paid off. It is a big decision to buy a house and a bigger decision to be ready to pay the EMI for the next 15 to 20 years.
We discuss ways which can help you in paying your home loan faster but before that let us discuss everything one needs to know about EMIs.
An Equated Monthly Instalment or EMI is the amount that the loan borrower has to pay to the lender for the loan they have taken to fund the buying of a property. The EMI payment includes amount towards the repayment of the principal borrowed and the interest that the bank charges on the loan given. During the initial repayments, the principal amount is comparatively low than the interest. However, during the end of the loan tenure, the proportion is reversed. Every month that borrower has to pay a fixed some of EMI for the loan taken.
When taking the home loan, the banks and financial institutes are ready to pay as much as 80 percent of the total value of the property. The rest 20 percent has to be paid by the borrower. The banks encourage that the monthly EMI that the borrower has to pay should not increase 40 percent of their monthly salary.
Prepaying home loan
Prepaying your home loan can help you reduce your outstanding debt as well as the tenure. Every year salaried people get a bonus from their work. Saving the bonuses of a few years and paying it all together can help in significantly reduce your outstanding loan. However, it is important to remember that banks charge a penalty for prepaying your home loan if you have a fixed rate of interest. The penalty is not applicable in case of floating rate of interest.
Best home loan tenure
When repaying your debt, it is important to not be in a hurry to pay it off as it might hurt your other financial needs. Choosing the longest tenure that not only fits your pocket but also helps you in savings is a great way to choose the repayment time limit.
Increasing home loan eligibility
When the loan is taken by two people of the family together, both their salaries are taken into account. This helps in increasing the eligibility of the home loan.
Tax benefit on the home loan
According to the Income Tax Act, the homebuyer can save his taxes and claim for deduction in both principal amounts paid as well as the interest paid per year.
Start saving early
According to experts, the professionals or potential homebuyers should start saving early in their career to buy the house of their dreams. With the cost of properties rising every day, it is only necessary that homebuyers save money to fund their purchase as much as possible. This will reduce the amount of loan they would have taken otherwise, thereby reducing the burden of the crushing debt.
We discuss ways which can help you in paying your home loan faster but before that let us discuss everything one needs to know about EMIs.
An Equated Monthly Instalment or EMI is the amount that the loan borrower has to pay to the lender for the loan they have taken to fund the buying of a property. The EMI payment includes amount towards the repayment of the principal borrowed and the interest that the bank charges on the loan given. During the initial repayments, the principal amount is comparatively low than the interest. However, during the end of the loan tenure, the proportion is reversed. Every month that borrower has to pay a fixed some of EMI for the loan taken.
When taking the home loan, the banks and financial institutes are ready to pay as much as 80 percent of the total value of the property. The rest 20 percent has to be paid by the borrower. The banks encourage that the monthly EMI that the borrower has to pay should not increase 40 percent of their monthly salary.
Prepaying home loan
Prepaying your home loan can help you reduce your outstanding debt as well as the tenure. Every year salaried people get a bonus from their work. Saving the bonuses of a few years and paying it all together can help in significantly reduce your outstanding loan. However, it is important to remember that banks charge a penalty for prepaying your home loan if you have a fixed rate of interest. The penalty is not applicable in case of floating rate of interest.
Best home loan tenure
When repaying your debt, it is important to not be in a hurry to pay it off as it might hurt your other financial needs. Choosing the longest tenure that not only fits your pocket but also helps you in savings is a great way to choose the repayment time limit.
Increasing home loan eligibility
When the loan is taken by two people of the family together, both their salaries are taken into account. This helps in increasing the eligibility of the home loan.
Tax benefit on the home loan
According to the Income Tax Act, the homebuyer can save his taxes and claim for deduction in both principal amounts paid as well as the interest paid per year.
Start saving early
According to experts, the professionals or potential homebuyers should start saving early in their career to buy the house of their dreams. With the cost of properties rising every day, it is only necessary that homebuyers save money to fund their purchase as much as possible. This will reduce the amount of loan they would have taken otherwise, thereby reducing the burden of the crushing debt.
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