Welcome to FundooMoney, your 24X7 buddy for all your money matters! Long after the euphoria of buying a new home wears off, the regular home loan EMI payment is one of those things most people want to leave behind. Good news is that you can go for prepayment of your home loan. But how do you do that? To get the answer, wait just a little while.
As a borrower, you need to remember that the longer you take to repay the home loan, more interest you pay. Thus, to make your home loan less costly, in makes sense to completely repay it before the end of the home loan tenure. Here are some essential steps that you need to take.
Examine if you have surplus funds Ensure that you have surplus funds which you can use for home loan prepayment. Remember to not compromise on important future needs like children’s education and retirement by using investments meant for them.
Find out about prepayment penalty or charges Before deciding on prepayment of your home loan, find out if there is prepayment penalty or associated charges. If your home loan is a fixed rate one, the chances are that you may have to pay a penalty. However, expect no such grief from a floating rate home loan.
In case of a hybrid home loan with an initial period of fixed rate of home loan interest after which the floating rate starts, it makes sense to wait for the period to get over. You can then prepay and avoid any penalty.
Check if you can commit to a higher EMI Another simple way of prepaying your home loan is by increasing your home loan EMI which correspondingly brings down your home loan tenure. However, it’s a long term commitment. Opt for it only if you are sure of a high probability of increase in your future income.
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