As a working-class individual, paying back a home loan before the actual tenure is a struggle for most people. Perhaps the sale of property or shares or returns gained from a long term investment or just the maturity of a government bond or insurance policy might make it a bit easy to pay off a certain portion of the overall principal amount and reduce one’s liability.
Other than EMI (Equated Monthly Instalments), one can pay back the home loan with a part-payment or prepayment facility. Part-payment is when one pays back a certain amount of the loan apart from the regular EMIs to reduce the principal amount borrowers owe. This can be done once or multiple times during the tenure, and prepayment or foreclosure is when one completely pays off the balance loan amount.
One can access all the useful information regarding eligibility, loan tenure, EMI amount and interest calculation on the website. Grihashakti offers visitors valuable self-planning tools like home loan EMI calculator online, commercial property loans, home loan balance transfer calculator online and much more. A home loan EMI calculator online is an essential tool for a home loan qualifier in successfully planning and pre-calculating the balance loan amount, EMIs, interest amount and so on to manage the instalments within the monthly/periodic budget.
Most financial institutions offer various home loans for individuals to cope with the ever-increasing real estate prices. One such loan provider is Fullerton Grihashakti. Grihashakti loan offers the best interest rates in home loans, loans against property and loans for commercial property.
Ways to Save Money with Home Loan Partial Payment
Once a loan is provided, it is the responsibility of the borrower to pay it back within the tenure. If one wants to repay the loan sooner than the actual tenure, one must plan such actions in advance.
Here are a few ways to reduce the interest burden or EMI expenses with the help of the home loan partial payment procedure.
1. When there is an increase in our income or savings, one can approach the provider with relevant documents to reduce the loan tenure and increase the periodic EMI amount. This can help us save immensely in interest payments that increase according to loan tenure.
2. With enough earnings, one can reduce unnecessary spending and implement an effective saving system. This overtime will result in the accumulation of appropriate funds to partially or entirely pay our home loan much before the scheduled date.
3. When the home loan is a floating interest rate mortgage, if the interest is high within the initial years of the loan, then more money goes towards clearing the interest amount rather than the principal amount. If one partially pays a good amount of funds toward the loan in the initial period, they might be able to close their home loan sooner than it would have taken with a higher floating interest rate.
4. Paying timely EMIs keeps the loan repayment on track. Even at a later stage when one has paid most of the remaining loan amount and cleared the interest amount, it is always better to pay back with some funds rather than waiting for the principal outstanding to be cleared with instalments.
5. The promptness in clearing the debt before the loan tenure supports and improves our overall credit score, which in turn will positively help us with our next loan application.
6. The partial payment facility is available, with most loan providers offering floating interest rates. As per RBI guidelines, home loans with floating interest rate comes with a unique feature of ‘no prepayment penalty’. This means if one as a borrower, has repaid the full loan amount before the loan tenure ends, they are not liable to pay any charges to the lender/loan provider.
Conclusion
Any relative within one’s immediate or extended family knowledgeable about finance can be consulted regarding loan repayment and partial payment. In all likelihood, whatever advice is given will always be accompanied with wise quotes like ‘borrow as little as possible and pay it back as soon as possible’.
If one is confident enough to repay the loan with partial payment or prepayment apart from the EMI instalments, with clear positive intentions, it is wise to move ahead with a home loan. Finally, choosing a reliable lender is very crucial.