Seven Ways To Close Home Loans Early

Pre-Payments

Opt for pre-payments to expedite home loan repayment. Making annual pre-payments reduces the outstanding principal amount. Ideal for those aiming to clear their home loan quickly without long-term financial burden.

Elevated EMIs

Choose higher Equated Monthly Instalments (EMIs) within your financial capacity. Higher EMIs swiftly reduce both principal and interest, hastening loan clearance. Use a Home Loan EMI Calculator to determine suitable EMI amounts based on your finances.

Shorter Tenor

Select a shorter loan tenor to alleviate mental and financial strain. While EMIs may be higher, opting for a shorter tenor saves significantly on interest. Ensure this option aligns with your budget and financial goals.

Balance Transfer

Consider Home Loan Balance Transfer (HLBT) to reduce interest payments. Transfer to lenders offering better interest rates for potential savings. Explore this option for improved financial benefits or dissatisfaction with current lender services.

Strategic Down Payment

Make a down payment exceeding 20% of the property value if feasible. Higher down payments reduce principal and interest burdens, facilitating faster repayment. Choose this option judiciously based on your financial situation.

Timely EMI Payments

Avoid missing EMIs to prevent financial penalties and credit score reduction. Late or unpaid EMIs incur a 1-2% penalty and negatively impact credit reports. Ensure timely EMI payments to maintain a healthy credit profile for future loan accessibility.

Capitalise on Tax Benefits

Utilise tax benefits under the Income Tax Act 1961 to reduce tax liability. Section 80C allows deductions up to Rs. 1.5 Lakhs for principal repayment. Section 24(b) permits deductions up to Rs. 2 Lakhs for interest payments. Section 80 EE offers tax benefits up to Rs. 50,000 annually for first-time homeowners. Redirect tax savings towards loan pre-payments for shorter repayment tenures.