5 Smart Ways to Repay Your Home Loan
Faster & Save Lakh

Owning a house is one of the prime financial goals for every Indian Family. To purchase a house, a sizable corpus is required. A Home Loan is a preferred way to finance this goal.

Home loans, which can last for decades, are most of the time the biggest financial commitments people make. Early loan repayment can give investors significant financial freedom, lessen stress, and save interest, freeing up funds for savings or other financial goals.

It's important to balance the advantages of early repayment with the possible returns from investing in other assets that could earn more than the house loan interest rate. At times, it makes more sense to invest more money rather than accelerate loan repayment because house loans typically have lower interest rates than other loan types.

Let’s take one example of a Home Loan of Rs. 50 Lakhs repayable in 25 years with 8.50% p.a.

Here are five practical strategies to think about if early repayment aligns with your financial objectives:

• Lump-Sum Repayment in Home Loan with Bonuses:

You can drastically lower the interest burden and shorten the duration of your loan by using annual bonuses, tax refunds, or other lump-sum payments to lower your principal. Over time, even setting aside a percentage of unforeseen money for your home loan can have a significant impact.

With the payment of an additional Rs. 50,000/- (almost 1 EMI extra) per year, you can save a lot of money.

• Incrementally Increase EMIs by a Certain % or Amount:

Gradually increasing your EMI payments can be a useful tactic when your financial circumstances improve - perhaps through a wage increase or a reduction in costs.  With this strategy, you can pay off the loan more quickly without significantly affecting your monthly spending plan.

Let’s take an example. If you increase EMI by just Rs. 5,000/- every year, the following will be the scenario.

• Create an ‘Early Loan Repayment’ Investment Plan

Create a special investing plan that contains yearly or biannual contributions to a fund created especially for making substantial payments toward your house loan. This method builds a corpus especially for loan repayment by applying the discipline of systematic investing.

• Adjust EMIs with Interest Rate Hikes

If at all possible, think about raising your EMI as interest rates rise rather than prolonging the loan term.  This proactive approach more effectively controls the overall interest payable and helps maintain the loan tenure.

• Refinance with Lower-Cost, Shorter-Tenure Options

Examine your loan terms on a regular basis and contrast them with what the market is offering. You can significantly minimize the total amount of interest paid and hasten your loan-free journey by transferring your loan to a different lender that offers cheaper interest rates or a shorter repayment period.

Reducing the interest rate by just 0.50% p.a. can lead to savings of Lakhs of amount.

The Advantages of Early Repayment:

The reduction in interest expenses is the most noticeable advantage of paying off your house loan early.  In addition to saving money, this raises your debt-to-income ratio and strengthens your credit profile for upcoming financial opportunities.  Furthermore, having no major debt gives you a great sense of financial freedom and peace of mind that is priceless.

Conclusion:

Making the big decision to pay off your house loan early necessitates carefully weighing your entire financial plan.  The aforementioned strategies offer a systematic way to effectively lower house loan responsibilities for individuals who determine that it is the proper course of action.  When used carefully, these tactics can increase your financial options and improve your long-term financial well-being by freeing up funds for savings and other investments.

Please note that reducing loan tenure or increasing your EMI will definitely reduce your total interest payment across the loan tenure. However, it will increase your monthly outflow for the period. Hence, it depends on your financial situation. Make sure that your monthly loan repayment does not cross 30% of your monthly income. 

To make sure that your strategy for speeding up house loan repayment fits with your entire financial plan, it is advisable to speak with a financial advisor.

Crush Your Home Loan: The 5 Strategies That Could Save You ₹40 Lakhs!

Are you stuck staring at a 20 or 25-year repayment schedule? The true cost of your home loan isn't just the principal; it's the massive amount of interest—often reaching ₹70 Lakhs or more—that you pay over two decades.

The good news? You don't have to stay on that slow track.

We've compiled 5 Smart, Tested Repayment Strategies that professional investors and financial advisors use to drastically reduce the loan tenure and save significant money.

In this essential 10-minute video, you will learn the secrets to:

• Saving up to ₹40 Lakhs on your total interest paid.

• Cutting your 25-year home loan down to just 10 years.

• Implementing simple strategies like Incremental EMI increases and smart Prepayment methods.

Stop making the bank rich. Start making smart financial moves today and achieve financial freedom years ahead of schedule.

➡️ Click here to watch the full Home Loan Repayment Strategy video and see how you can save lakhs!