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Tata Capital > Blog > 5 Things You Need to Know On How to Repay Home Loan Quickly

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5 Things You Need to Know On How to Repay Home Loan Quickly

5 Things You Need to Know On How to Repay Home Loan Quickly

Do you want to minimise your financial stress? Then, repay your home loan as quickly as you can! 

While a home loan enables you to purchase your dream house conveniently, it is also a substantial financial commitment. So, it is crucial to manage your repayment and make informed decisions as you pay off your EMI. By paying off your loan smartly, you will: 

  • save massively on your interest outgo.
  • become debt-free sooner.
  • improve your credit score.

Here are five ways you can repay your loan quickly. 

#1 Make the maximum down payment

If you have the financial means, pay the maximum down payment amount that your lender’s terms allow. By doing so, you will significantly lower your principal loan amount. As a result, your net interest and EMI value will reduce. 

Experts recommend putting down a down payment of 20% to 25%. If you have any stagnant investments that are not generating expected returns, consider liquidating them and using the money as a down payment. 

#2 Look for lower interest rates

Today, you have plenty of home financing options. However, don’t rush to make a deal with the first lender you find! Research and compare different lenders and find a suitable one that offers you competitive interest rates. The lower your interest rates, the smaller your EMIs, and the sooner you can close the loan. 

If you are already repaying a home loan at a higher interest rate, you can consider a balance transfer with a lender offering lower rates.

#3 Consider the additional charges

Before choosing a lender, consider processing fees, late payment charges, and other hidden costs, as they can make a considerable difference in your overall repayment. 

Once you learn about the additional charges, avoid paying the conditional ones. For example, by paying your EMIs timely, you can steer clear of late payment charges.

#4 Increase your EMI

If your income has increased after taking the loan, you can request your lender to increase your EMI amount by shortening your tenure. 

This is an effective way to get debt-free faster because even a slight increase in your EMI can significantly reduce your loan tenure. Use a home loan EMI calculator to plan your new EMIs and see how many years you can take off from your tenure. 

#5 Make partial pre-payments

Making partial pre-payments helps you lower your future EMIs and allows you to repay the loan within a shorter duration. 

Your lender’s pre-payment terms and conditions are important to consider here. Some lenders do not charge for a certain number of partial pre-payments! So, do your research. If you find that the total pre-payment charges will be lower than your overall interest outgo, you can choose this option. 

Know Your Potential EMIs Before Applying for a Home Loan

If you’re looking for how to repay home loan faster and haven’t applied for a loan yet, you can use an online home loan repayment calculator to determine your potential EMIs. The calculator considers different factors like your principal loan amount, interest rate, and desired loan tenure to arrive at a result.

When you know your potential loan EMIs, it becomes easier to manage your monthly budget and repay the home loan comfortably. Follow these steps to use the online home loan repayment calculator-

  • Visit the official website of your desired lender.
  • Navigate to the home loan section and click on ‘EMI Calculator’.
  • Enter the required details like the principal amount, interest rate, and loan tenure.
  • Click on ‘Calculate’.

The home loan repayment calculator will calculate your potential EMIs in seconds. If the EMI exceeds your budget, you can adjust the values to arrive at a more comfortable amount.

But remember, if you opt for a shorter loan tenure to repay the home loan quickly, it will increase your EMI value. If you have an existing loan and are looking for how to repay home loan faster, then you can consider a part or full pre-payment.

In conclusion

Follow the tips given above for a smooth loan repayment experience, lower your EMI burden, and become debt-free sooner! 

Tata Capital is here for you if you want to switch lenders for more competitive loan terms. We offer affordable home loan interest rates and flexible EMI options. Visit our website to learn more and check your home loan eligibility.

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