Get the Tata Capital App to apply for Loans & manage your account. Download Now

Blogs SUPPORT
Loans For You
Loans for Business
Investment
Insurance
Apply

Quick Links for loans

Quick Links for Insurance

Investment

Offers Quick Pay
Back

Equipment Finance

Avail Digital Equipment Loans
up to Rs. 1 Crore

  • Attractive ROIs
  • Customizable Loan tenure
Know More
Back

Equipment Leasing

Avail Leasing solutions
for all asset classes

  • Up to 100% financing
  • No additional collateral required
Know More
Back

New Commercial Vehicle Financing

  • First time user
  • Retail and strategic Clients
Know More
Back

Used Commercial Vehicle finance

  • Repurchase
  • Refinance
  • Top up
  • Balance Transfer
Know More
Menu  
 
Apply Now

Tata Capital > Blog > 5 Tips to Prepay Your Home Loan Faster

Loan for Home

5 Tips to Prepay Your Home Loan Faster

5 Tips to Prepay Your Home Loan Faster

Prepaying home loan might seem to be a difficult and tedious task for a fixed salaried person, but proper planning and a little bit of financial discipline can help you achieve this. While many borrowers consider home loan prepayment as a top priority financial exercise, others believe normal monthly EMIs give them tax saving. Here they forget that it deprives them of the HRA component in their CTC. Plus, you can never forget the burden of home loan in your lives. One of my friends, after paying the first installment of his home loan said, “Looks like someone has tied chains to my feet and I am asked to pull an elephant.” The statement, though ironically said often holds true for many middle- class households in India. One has to make financial compromises, now and then. Repayment of the home loan before the estimated time not only gives financial freedom but also adds to family happiness and content. However, before you start the prepayment process, you should ensure that you and your family are financially secure. You must keep aside an amount that equals 4 -5 EMIs which will help you in the case of an unexpected job loss or a job change. You must also have an exigency fund for health and other emergency needs. Plus, your children’s education needs should also be taken care of. Clearly, your home loan prepayment plan in no way should affect these.

Additional Read: Home Loan Prepayment: Top Things to keep in mind before prepaying

Let’s have a quick look at some tips that can help you repay your home loan before its actual tenure.

•    Start making partial payments whenever your pocket allows

The sooner this practice should is adopted, the earlier you can finish off your loan. So, if you are planning to buy a brand new LED this festive season, you need to postpone this idea for some more time. Instead, try to deposit festival bonus in your home loan account. Partial payment can also be done with your maturing fixed deposits and other investments. You must check all your investments and whether they are paying you more interest than what you are paying to your home loan repayment. It is estimated that average loan tenure in India is 7 to years, therefore, one should not leave any opportunity of prepaying the loan.

•    Increase EMI amount with increase in income

At the time of loan approval, banks fix the home loan EMI amount to 40- 50% of your take home salary. But as years pass by and your salary increases, the EMI remains the same. To maintain this balance, one should keep tweaking the EMI structure with increase in income.

Additional Read: How to Reduce Home Loan EMI – Tips and Tricks

•    When is the right time to prepay home loan

You must be knowing by now that your lender charges mostly interest from the initial EMIs. The amount that goes for principal repayment is almost negligible. Hence, it is advised to prepay your home loan in the first 7- 8 years of your loan tenure. In this way, you will be able to save a good value of interest amount. However, if there is more than one loan running simultaneously, you should first aim to pay off the loan with more interest.

In a nutshell, it is always beneficial to pay off your home loan any time before its expected tenure. Until the last couple of years, banks and other financial institutions were charging a significant amount as a penalty for closing home loan account before time. But, RBI has waived of this rule in June 2012. So, now you won’t be paying any penalty to the lender if you wish you close your loan account before time.

Apply for Affordable Housing Loan

Say Hello to Your New Home with Our Easy Home Loans!

Apply now
Popular Searches
anyror modt charges 712 utara online gujarat pre emi calculator earnest money deposit Goa Land Record earnest money khasra number meebhoomi Assam Land Record
Disclaimer

Most Viewed Blogs

Trending Blogs

Calculator

Personal Loan EMI Calculator

Personal Loan EMI Calculator
Home Loan EMI Calculator

Home Loan EMI Calculator
Business Loan EMI Calculator

Business Loan EMI Calculator
Used Car Loan EMI Calculator

Used Car Loan EMI Calculator
Two Wheeler Loan EMI Calculator

Two Wheeler Loan EMI Calculator
Loan Against Securities Calculator

Loan Against Securities Calculator
Loan Against Property Calculator

Loan Against Property Calculator
More Tools
Our Subsidiaries
Our Other Websites

Useful Links and Resources

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Policies, Codes & Other Documents

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Tata Capital Solutions & Services

Uh oh, something went wrong

Please try again later.