Have you ever wondered how you can repay a 25-year home loan in just 10 years? It may sound impossible, but with the right strategy, it is completely possible. Today, we will share a strategy that can help you save lakhs of rupees in interest and also achieve financial freedom. Let’s see how you can repay your home loan in 10 years.
1. Make Extra Payments
This is the easiest and most effective way. Apart from your monthly EMI, pay a small extra amount every month. Small steps like this work very well. For example, if your EMI is ₹40,000, and you pay ₹5,000 extra every month, you are paying an additional ₹60,000 in a year. This extra money directly reduces your loan principal, which also lowers the interest quickly.
2. Increase EMI Every Year
When your income increases, increase your EMI too. For example, if your salary goes up by 5–10%, increase your EMI by the same amount. This will not feel like a burden because your income is also higher. But it will help you repay the loan much faster. Using this method, you can finish your loan 12 years earlier.
3. Make Lump-Sum Prepayments
If you have a home loan of ₹50 lakh at 8.5% interest for 25 years, your EMI will be around ₹40,000. Total interest will be about ₹70 lakh. Now, if you pay an extra ₹2 lakh every year from your bonus, tax refund, or savings, your loan tenure can reduce to around 10–12 years. You can save around ₹35–40 lakh in interest.
4. Home Loan Restructuring
If your home loan has a high interest rate, restructuring can help. Banks sometimes offer better interest rates, and you can use this to reduce your total interest. First, ask your current bank if they can give a lower rate. If not, you can transfer your loan to another bank with a lower interest rate. This method can reduce your EMI and help repay your loan faster.