3 Ways To Raise Money To Prepay Your Home Loan

  Author: Naveen Kumar

There are many advantages of prepaying your home loan. For instance, by doing so,  you can free yourself from a substantial financial obligation and re-direct the money towards investments for major future needs be it child’s higher education or your retirement. But before you do that how do you organise the money for the home loan prepayment? We would like to suggest three ways of doing it.

Regular savings for partial prepayment Typically home loan providers have minimum limits for prepayment of home loan. This could range from one to many months of EMI. So, even with small amounts of regular savings made through financial instruments such as bank recurring deposit (RD) or systematic investment plan (SIP) of a liquid fund offered by mutual funds, one can raise money for a partial prepayment.

Future increase in income Whenever your income rises, typically with a pay hike, ensure that you use most of it is used for partial prepayment of home loan. Again you can use an RD or a liquid fund SIP to raise the money for home loan prepayment.

Utilise windfall gainsWhenever you get any windfall gains like a bonus, incentive, gift or any unexpected income, you can direct most of the money for prepayment of home loan.

Clearly, money from pay hikes and any windfall gains are the best sources for partial or full-prepayment of your home loan. You need to be on the lookout for these savings opportunities so that you save a substantial amount of home loan interest through prepayment.