How to pay off your home loan faster

Pay off your home loan faster

Applying for a home loan maybe one of the most important decisions an individual may have to take in his life.It can have huge implications on his or her financial stability because paying off a home loan means keeping aside a huge part of your monthly income for EMIs or loan instalments.When you consider the fact that home loans usually have a tenure of 10 or 20 years, an individual spends a significant amount of his life savings on a home loan.Owing money to the mortgage lender can be a huge financial burden for most people especially salaried individuals.Most home loans can be paid off in full any time during the tenure of the loan.There are various strategies you can use to pay-off your mortgage as early as possible.

payoff your home loan

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Start Paying more

This is very straightforward and self explanatory.If you increase the payments of your instalments, you can significantly reduce the tenure of your home loan, although it is easier said than done.For most people, keeping aside some extra money to increase the EMI can be financially draining, however with a little discipline, it can be achieved.When you make the payments, it gets added to your principal balance and not just the interest amount.So it is wiser to pay more towards the loan amount during the initial phase of your loan tenure.

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Align your instalments to your pay check

This can be a very effective strategy to make sure that your instalments are paid on time to make sure there are no defaults. For example if you get paid on the first of every month, make sure your EMI will be paid on the fifth or sixth of every month.If you get paid bi weekly, then align your mortgage payments in such a way that you are paying your instalments bi weekly.

Make frequent lump-sum payments

There are many banks which allow lump sum payments which gets credited to your principal balance. Individuals should take advantage of this facility and make payments whenever they get some bonus or incentives.This is a good way to reduce the tenure of your home loan.

Refinance to a bank with lower interest rates

Not all banks provide home loans at the same rates of interests.Various lenders have different rates of interest depending on the type of mortgage, credit rating of the borrower,age of the property etc. Find out which lender has the lowest interest rates for home loans and refinance your mortgage with them.

If you follow some of these tips, you can definitely reduce the tenure of your home loan and pay off your debts as soon as possible.

 

 

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