How quickly can I repay my home loan?

Everyone knows that a home loan payment schedule is usually in the form of equated monthly installments (EMIs). However, very few people actually know the home loan payment scheduleis prepared. Do interest payments increase or decrease over time? How does the home loan payment calculator work? Mentioned below are a few tips on how one can smartly repay their home loan payments on time.

• Fund Management The main purpose of fund management is to keep track of what funds are providing you better returns or incentives and close the ones that are not. One can close investments which are not very rewarding and utilize the same towards home loan payments.
• Selection of the Apt Home Loan Payment Schedule Each one has a different ideology on how they wish to close their home loans when comparing their incomes. Some may wish to opt for higher EMIs at the initial stage, while some at a latter. Reducing the loan burden by opting for a higher EMI initially can drop off a few months from one’s home loan payment schedule.Some people may even opt for vanilla home loan payment schedule where EMIs are computed as per the home loan payment calculator. In this, though installments are equated, the interest payments reduce over time with the increase in principal amounts.
• Look for Tax Benefits Tax benefits for home loan principal and interest payments are permissible under the Income Tax Act up to a maximum ceiling limit. Therefore, it is advisable that one opts for a home loan payment schedule, which derives the maximum benefit under these sections.
• Partial Prepayments RBI has stipulated for waiver of prepayment penalties. Therefore, it is advisable for one to prepay as much amount as possible whenever available. Partial prepayment is not a speedy way to reduce your home loan payment but also reduces the tenor. Faster closure of loans provides one more disposable income for other purposes.
• Shift the Home Loan to Another Bank Considering the high competition in the home loan lending business, it is not uncommon for other lenders to offer lower interest rates, longer tenor or structured repayments. Therefore, one can opt for a balance transfer and shift their home loan to a lender offering much better terms. It is advisable that one does not shift for just a minute advantage, since the entire procedure of loan appraisal, processing fee charges, and other fees are levied by the new lender too.
• Use a Home Loan Payment Calculator The home loan payment calculator is an effective tool to determine how much home loan one can sustain while providing information on the home loan payment options, down payments and scenarios such as different interest rates. Numerous home loan payment calculators available online help in determining which home loan payment mode is ideal and financially viable for the applicant.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.