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Home Loan Repayment Tips Research Team | Posted On Tuesday, June 05,2018, 06:27 PM

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Home Loan Repayment Tips



A home loan is an amount that a bank lends so that you can buy a house or a property. Your house is the collateral. If you don’t repay the home loan, the bank will seize the property and auction it to recover the dues.

Banks give you up to 80-90% of the cost of the property as a loan. You have to arrange the remaining amount from your own funds.

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Home Loan Repayment Tips

Repaying a home loan is as important as availing it. If you don’t make the repayments in time, you could even lose your home. Please go through these tips very carefully.

1. You Must Pay Higher EMIs on Your Home Loan

One of the best ways of getting rid of that home loan really fast is to repay it much before the tenure. All you have to do is pay slightly higher EMIs and you can knock off a few months or even years from your home loan tenure.  

This is not easy. You need higher returns from your investments to repay higher home loan EMIs.

If you are an aggressive investor, do consider an investment in equity mutual funds and stocks. These are high-risk investments but have the potential to give high returns.

See Also: Why is Your Home Loan EMI Still High?

2. Manage Your Money to Repay the Home Loan

All you need to do to manage money and repay your home loan really fast is a simple cost-benefit analysis. If you find a lot of money parked in your SB account (Most SB Accounts give you an interest of 3.5% a year) or an FD (interest is around 6.5-7% a year), then look to pay off home loan EMIs with this money.

Why save or invest money in financial instruments which give the interest of 4-7% a year, when the bank is charging much higher interest on home loans?

3. Make a Partial Pre-Payment

Partial pre-payment is the early repayment of a portion of the home loan. If you don’t do partial pre-payment, then you land up paying higher interest on the home loan.

Most banks do not charge a penalty for pre-payment. Even if there’s a pre-payment penalty, it’s not too high.

Has your boss given you a bonus? Use it in partial pre-payment of home loans. If you get any income by selling some land, your FDs have matured, any rental income or gifts from close relatives, use this money for partial pre-payment of home loan.

See Also: Home Loan Interest Rates Rising

4. Opt for Home Loan Balance Transfer

You can save on home loan interest by choosing banks that charge lower interest rates. The way to do so… Home Loan Balance Transfer….

A home loan balance transfer allows you to get a home loan from a different bank at lower interest rates than your current bank. The new bank/lender pays the outstanding home loan to your bank.

You will have to pay all future home loan EMIs to the new lender. EMIs depend on home loan interest rates fixed at the time of seeking a loan from the new bank.

Take a look at these points:

  • Loan appraisal and legal paperwork must be done again if you opt for a home loan balance transfer.
  • There’s a nominal fee which is about 1% of the outstanding loan for the balance transfer facility.
  • Keep a sharp look-out for lucrative schemes banks offer in the festival season.

See Also: Home Loan EMI Calculator

5. Never Miss Home Loan EMIs

Never make the mistake of delaying home loan EMI payments. Your loan would be tagged as a Special Mentioned Account (SMA). Banks categorize loan accounts as SMAs, if payment remains outstanding for 30-90 days after the payment due date.

Never avail of new loans like personal loans or car loans if there are chances you’ll struggle with home loan EMIs.

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