Owning a house is a big accomplishment in life. Many middle-class families aspire to buy their own house and opt for a home loan to transform their dream into a reality. Such a loan is a convenient option for them. It has a tenure of 30 years, which covers a major period in one’s life. If you have taken a home loan and are looking to prepay it, you need to focus on some financial responsibilities.
Ways to prepay the home loan
Here are smart ways to help you with the prepayment of home loan.
Make a part payment
Keep in mind that you do not have to hit the jackpot to pre-pay the home loan. If you are taken a loan in your 20s or 30s, you can close the loan within a period of eight to ten years with your savings, bonuses, increments, and an additional income. If you make a part payment, you can reduce the payment towards interest and it will decrease the tenure. When taking a loan, you need to check with the lender if they allow you to make a part payment. Enquire about the number of part payments that you can do in one financial year. Prepare a repayment schedule at the time of borrowing to plan the prepayment of home loan.
Increase the Equated Monthly Instalment (EMI)
During the loan application and after the submission of documents required for home loan, you will be informed about the EMI that you need to pay. If you are paying a low EMI and have a long tenure, you will be paying a high amount of interest. In this case, you need to contact the lender and ask them to restructure the loan. You can opt for a high EMI to reduce the tenure and clear the loan earlier.
Transfer the home loan balance to a new lender
The home loan transfer allows you to transfer the outstanding loan amount for a low- interest rate. If you have a good credit score and a high monthly income, you can switch the balance home loan to a different lender who offers you a lower interest rate. It will make a huge difference to the EMI because by transferring your loan the rate of interest will reduce. Remember to understand the terms and conditions of the new lender before you transfer the loan. You need to find out the processing fees charged by the new lender. You must assess the benefits against the cost and then make a decision.
Home loan balance transfer with Finserv MARKETS is quick, convenient, and hassle-free. Moreover, you also get a customized insurance plans to ensure that the burden of home loan does not land on your family in your absence.
Make investments to prepay the loan
Investment can take you closer to your financial goals. With the right type of investments, you can achieve greater returns. You can use these returns on investment to prepay the loan. You can invest in several investment products keeping your income and risk appetite in mind. You can choose to invest in mutual funds, fixed deposits or the stock market. Choose an investment product based on the tenure and your risk-taking ability. After around five to ten years, you can use the income to prepay your home loan and save a lot by cutting down on the amount of interest payable.
Using the aforementioned tips will help you, prepay your home loan. It is advisable to prepay the loan during the initial stages to save on the amount of interest paid. Paying it at a later stage will not make much difference because you would have already paid a major part of the principal and interest.
If you are someone who is looking for a housing loan, you can apply for a home loan available for Finserv MARKETS. Bajaj Finserv home loan has an online application procedure and requires minimal documentation. With the help of Bajaj Finserv home loan, you can apply for a loan amount of up to Rs 3.5 Crore and also opt for an additional Home Loan Top Up of up to 50% of your approved home loan amount. You can choose the repayment tenure up to 25 years depending upon your convenience. Moreover, you can also customize your home loan according to your requirements. In case of any query, you must seek the help of a financial advisor. This will help you avoid any inconvenience in later stages.
Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.