If you have been paying rent for all these years, moving into your new home will certainly feel like you have achieved something big that you have rightfully done. Considering the real estate prices coupled with increasing inflation, most of us take financial assistance in the form of home loans, either from SBI Home Loan or from other lenders. Typically, home loan repayment terms range from 15 years to 25 years. This means a sizable amount from our salary and income goes into paying home loan EMI. One can easily find the exact amount payable by using SBI Home Loan EMI Calculator or by visiting the branch office.
We understand home is one of the biggest investments not just financially but emotionally as well. No doubt taking a home loan involves a long-term commitment to paying EMIs; however, there are clear strategies that can help you become debt-free sooner. We are going to discuss clear-cut strategies that will help you pay your home loan faster.
If possible, make the maximum down payment.
It is advised to make the maximum down payment possible rather than taking the maximum loan amount you are qualified for by SBI Home loan, or any other lender will considerably cut your principal loan amount and, as a result, your interest and EMI payments. As per experts, you should put down at least 20 to 25 percent, or more if you have adequate financial resources, for a home loan repayment.
Choose a lender that offers a lower interest rate.
This, of course, goes without saying; you should choose that lender that offers lower interest rates. There are many banks and housing finance companies like SBI Home loan that provide house loans, but as a borrower, it is important to do your homework, evaluate various lenders on the basis of interest rate and other associated charges and choose the one that offers more value. You can use SBI Home Loan EMI Calculator to get an exact idea of how much you will be paying to your lender.
You will be able to pay off your debts sooner if the interest rate is lower because you will have less money to repay. If you already have a house loan with a high-interest rate, you may want to think about switching to a home loan balance transfer for a lower rate, which might significantly reduce your overall interest expense.
While evaluating, think about additional fees and charges.
No doubt interest plays a huge role while selecting a home loan provider, but along with that, associated charges or hidden fees, one may say, also play an equal role as they can significantly affect the cost of a loan which generally cannot be calculated by SBI Home Loan EMI Calculator. Processing costs, late payment charges, and other hidden expenses should also be taken into account when choosing a lender like an SBI Home loan. In order to prevent late payment fees, make sure you pay your EMIs on time as well. Additionally, late payments may lower your credit score, which could cause future loan applications to be denied.
Increase Your EMI
If you have received a good increment or your income has increased after availing of a home loan, you can talk to your lender or use SBI Home Loan EMI Calculator and choose to pay more EMI by reducing the loan tenure. This is a common way of repaying the home loan faster, especially with salaried individuals. Even a small increase in the EMI can significantly reduce your loan tenure.
Make part payments
If you have taken a home loan with a floating interest rate, the lenders do not charge for a certain amount of part-payment you make. Therefore, it is advised to make home loan part payments if you have a surplus rather than overspending. However, you should first confirm with your lender the prepayment fees, as some lenders charge after a specific sum or number of part payments, and some do not.
Choose your loan tenure wisely.
You can pay off your debt faster by choosing a shorter home loan tenure and paying higher EMIs. Besides, you wind up paying less in interest if the loan tenure is shorter. You should keep in mind, nevertheless, that by selecting the shorter loan tenure, your EMI increases. In case you are unable to pay your EMIs on time due to any reason, you will be charged for the late payments, and it will be on your credit record for a considerable amount of time. Thus, you should be careful when choosing loan tenure. If required, use SBI Home Loan EMI Calculator to check the tenure and amount you should opt for. It is a good choice to opt for a longer loan tenure with EMI that you can easily repay without restricting your essentials.
Tax Benefit
Even though getting a home loan is expensive, there are various tax advantages that can help you save a lot of money each year. According to Section 24 of the Income Tax Act of 1961, you may claim up to Rs 2,00,000 in taxes for house loan interest payments made in a given fiscal year. When it comes to house loan interest payments, for instance, people in the 20 percent tax band can save up to around Rs 40,000 per year, while people in the 30 percent tax bracket can save up to about Rs 60,000 per year.
Tax Advantage from the Falling Interest Rate
Loan interest rates tend to decline when the Reserve Bank of India (RBI) lowers the repo rate. In such a case, you can either shorten the tenure or lower the EMI. It is advised to tenure the loan term while maintaining your current EMI or even raising it if your financial situation permits you to pay off your home loan more quickly.
To Sum Up:
Those who are paying rent look forward to arranging a down payment amount and taking an SBI Home loan or from any other lender to finance the real estate property. After all, as against paying rent to a landlord, which is a sunk cost, it is better to pay the home loan EMIs as the home equity is 100 percent once the loan ends. If you have any investments that are not helping you earn higher returns, you can consider liquidating them to reduce your overall home loan debt burden in the future.
Use the simple strategies explained above to pay off your mortgage more quickly. Faster loan repayment allows you to have extra cash on hand, which you can utilize to accomplish other important life goals like starting a retirement fund, paying for your child’s further etc. also, and payment.
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