How to repay home loan faster-5 tips to follow

When you make a prepayment towards your home loan, especially early on in your loan tenure, it brings down the outstanding principal amount. And the lower your principal amount in the later years of your loan tenure, the lower your future interest liability will be.

If given a chance to choose between reducing your EMI amount and your loan tenure, always choose reducing your EMI tenure. This could mean significant interest savings in the long run.
Reducing the tenure shortens the overall loan period, which directly cuts down the total interest outgo. On the other hand, while reducing the EMI amount might give you temporary financial relief, it will keep your loan running longer, and hence, increase your interest payments.

If your lender is offering attractive interest rates to new borrowers, don’t hesitate to ask for the same. If you have a good repayment history and a strong credit score, you can help secure a lower interest rate, which directly lowers your EMI. Even if your home loan is reduced to 7.8% to 7.75%, it can make a difference of lakhs of rupees to your interest payments over the long run.

Using your bonuses or extra income to step up your EMI amount can also help reduce your loan principal faster. This approach lowers the total interest burden and shortens the tenure of your home loan, freeing you from debt sooner.

If you have a fixed-rate loan but floating rates are currently lower, switching could reduce your monthly payments. Fixed-rate loans are generally more expensive. Floating rates adjust with market changes and often lead to lower interest costs when rates are stable or falling, as is the case currently.