Guide to Free Yourself From Home Loan EMIsFebruary 28, 2020
With government initiations and tax benefits, the demand for home loans may increase to 40% by 2025 from the current 28% in 2019. Easy availability of housing loans, affordable interest rate and fast urbanization are the reason for this increasing numbers.
Another reason is having a 65% population under the age of 35 of age in this country. This population can easily avail housing finance as they have plenty of time to repay the loan. Moreover, with the help of an online housing EMI calculator, they can also manage their own finance beforehand.
Nonetheless, in several effective ways, you can make yourself free from EMIs. Here is how –
- Raise the amount of your EMI payments
To be free from your loan EMIs you need to repay the loan amount along with the accumulated interest as fast as possible. For faster repayment, you can increase the amount of your EMIs.
As a home loan comes with long tenor up to 20 years, you are likely to receive an economical increment in your salary as an earning individual in this period. In such cases, you can contribute this increment towards your EMIs. Use a home loan EMI calculator to reassess your monthly installments before doing the same.
- Prepay your loan amount
Again, you can avail the advantage of the long tenor of home finance. Within the tenor, if you earn any additional income, you can allot that towards the advance payment of your loan. This extra income can come in terms of salary increment, bonus or several other sources.
By prepaying your loan amount, you can avail 2 benefits:
- Firstly, you can keep on paying the same EMI amount while shortening the tenor. In that case, you should know how to trim your loan tenor.
- Secondly, you can decide how much EMI to cut down to keep the tenor same. Nonetheless, it is preferable to retain lesser tenor so that the accumulative interest becomes lesser too.
- Foreclose the loan
To repay the loan amount as early as possible you can opt for foreclosing option. During the tenor, if you receive a considerable amount, it is advisable to foreclose the loan and save on interest.
- Refinance via a balance transfer
Considering your age, eligibility criteria and financial strength, you can transfer the loan balance to another lender offering lower home loan interest rates. With reduced interest rates, it will help you to repay your loan earlier than your original tenor.
The poor CIBIL score is one of the reasons that can attract a higher interest rate. Hence, you must know the required CIBIL score for a home loan and also how to improve it when it is low.
Additional Read: Know Why Is It Beneficial to Use an Online Home EMI Calculator
Factors that affect EMI:
While considering the facilities to be free from your loan EMIs, you also need to know about the factors that affect the same. Adjusting these can help you find the right housing loan EMI –
- Down-payment – The higher the down-payment, the lower will be your principal, which will also reduce the EMIs and cost of the loan.
- Tenor – A longer tenor comes with affordable EMIs, and is beneficial when the interest rates are high. However, prolonged tenors also increase the cost of the loan.
In conclusion, you need to plan your EMIs before availing housing credit. A home loan EMI calculator can help you out in this regard. With organised financial decisions, you can get rid of your EMIs earlier.