Home Loan Prepayment: Points To Consider

A home loan is a huge debt on people’s heads. As you avail a Home Loan the first thing that pops up in your mind is can I pay more than emi in home loan? Luckily, the answer is yes. Accordingly, whenever people have surplus funds, they want to repay his loan. We will list out a few considerations that you must look into before your home loan prepayment. Home loans are not like your normal car loans or anything else. There are a lot of factors that are associated with the prepayment of home loan and those are of very high value.

Home Loan Prepayment: Points You Must Consider

• The first consideration would be about your financial requirement. When you go for repaying the home loan, you will exhaust all your liquid funds which could have been used for other purposes like emergencies on medical grounds. When you are going for repayment of a home loan, ensure that you have enough funds for other matters.
• The age of the borrower is also a very important factor when you go for a home loan. If you are nearing your retirement age, you should close your home loan account as soon as possible. This is because, after retirement, you will not have many liquid funds and a source of income. With the increasing age, your medical expenses will also increase and it will pile up to a huge amount.
• The next factor would be knowing about the stage of the loan. When you are repaying the loan amount, the major factor that benefits you is that you would not have to pay the interest anymore. The interest component is higher during the initial stage of the loan. So if you want to repay the home loan in the initial stage, it might be a good step but if you want to go for it in the ending stage, it will not be of much use because, at that time, the interest amount would not be much.

Things You Should Know Before You Prepay Your Housing Loan

• You would also have to have a look at the home loan tax benefits that are available. Along with this, have a look at the home loan prepayment rules that are given out to you. You should also have a look at the home loan repayment calculator and analyse the home loan prepayment tax benefit. You can claim exemptions under various sections of the income tax act. Go through all of them and make a wise decision at the right time.
• Check for the returns from the investment you are getting. The fund that you are going to use for prepayment of the loan can also be used to invest in other investments that will give you higher returns. This is the reason why you should have a look at the prepayment home loan calculator so that you always have the precise calculations in hand. Your current financial situation also plays a very important role in this. Are you ready for a new investment or do you want to get rid of the liability of the old one? All these are the questions that you must ask yourself and get the answers as soon as possible.

Wrapping up

Lenders generally let you prepay your outstanding home loan balance either in parts or completely. If you prepay a part of your loan you can reduce your EMI t amount. At times the lender asks you to reduce the total loan repayment tenure instead of reducing your EMI amount. The biggest doubt in the mind of a borrower is should I go for Home Loan Prepayment. Do not get influenced by what an agent is saying. You know your case the best. Use all the resources that are available online to make the decision.

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