Everyone dreams of owning a house, but these days, property prices are so high that it has become difficult for the common person to buy one. That’s why many people take a home loan. But later, this loan often becomes a big burden.
A large part of the salary goes into paying the monthly EMI (Equated Monthly Installment), which becomes hard to manage for many people. However, with a few smart strategies, it is possible to repay the home loan before time. In this article, we will share easy and helpful tips to reduce your EMI burden and pay off your home loan faster.
1. Increase Your EMI to Pay Off Faster
If you want to repay your home loan early, try increasing your EMI. Paying even one extra EMI every year can reduce the overall loan amount. This also helps save on interest and shortens the loan period.
2. Understand the Interest Rate
Let’s take an example: if you take a loan of ₹50 lakh for 25 years at 8.5% interest, your EMI will be around ₹40,000. If you make extra payments above this EMI, you can repay the loan much faster.
3. Raise Your EMI Every Year
If you increase your EMI by 7.5% every year, your loan gets repaid faster. It brings down the principal and saves interest. Following this method, a 25-year loan can be cleared in just 10 years.
4. Use Extra Money for Lump-Sum Payments
If you have extra savings, use them to make a one-time payment on the loan. This reduces the loan burden and cuts down the interest amount.
5. Cut Unnecessary Expenses
By reducing your extra spending, you can save more money to put toward your EMI. This helps you repay the loan faster without putting pressure on your regular budget.
6. Choose Short-Term Loans When Possible
If you can manage it, opt for a short-term home loan. Though the EMI might be higher, you’ll pay much less in interest over time and get debt-free sooner.
7. Track Changes in Interest Rates
Always stay updated on bank interest rates. If another bank offers a lower rate, consider switching your loan (balance transfer). A lower rate means lower EMIs and faster repayment.
8. Create a Second Income Source
Start earning extra through freelance work, side jobs, or small investments. Use that extra income to pay more EMIs. This will help you close your loan earlier.
