Techniques to Close Home Loans Early

 

It is imperative to know that the house/property you are buying/constructing is mortgaged to the lender and is rightfully owned by that lender until the loan is completely repaid. There are other reasons to pay off a loan early as well. As you grow old, it is better to have little or no debt remaining. If you have an existing Home Loan, it should be paid off early to save better for retirement and avoid any additional penalties if you fail to repay the installments upon loan maturity. While applying for a Home Loan, the borrower must have a clear and possible strategy in mind to repay the loan, and the funds to pay the EMIs should be secured as soon as possible. City Union Bank provides Home Loans for a maximum amount of Rs. 1 crore, which can be repaid over 20 years. The interest rate for a City union bank home loan ranges between 10.50% to 13.00% per annum. The ROI is higher for longer tenures. So it is better to pay off the loan early so that the interest rates don't rise and the finances are not affected in the long term.

To have a better repayment strategy and manage your money to Foreclose your existing Home Loan, follow the following tips -

Select a short tenure if possible: While it may seem absurd to opt for a relatively more specific period of repaying such a considerable amount, you should keep in mind the future effects that the loan EMIs might have on your expenses. You may be required to pay higher EMI for a short tenure, but if your salary and savings allow for such a situation, it is wise. Therefore, it is advisable to first evaluate your savings and finances even before starting to look for a Home Loan, to begin with. Shorter tenure leads to a lower interest rate as well.

Try to make part payments or prepayments whenever possible: As you continue a salaried job, you are bound to get bonuses and pay increases, so it is better to use some of that extra money to make additional payments for your Home Loan repayment. The outstanding loan amount will therefore decrease, and the subsequent EMI will also get lowered. If the business expands, they can pay off the loan early by making prepayments for self-employed people. It is better to check before any foreclosure charges or prepayment penalties imposed while signing the loan agreement.

Choose Balance Transfer for lower interest rate:

The Home Loan Balance Transfer (HLBT) can be used to transfer your outstanding loan amount to another Bank) NBFC is offering a lower home loan interest rate. This way, specifically, you can manage your finances better, and the loan can be paid off quickly. You need to consider the processing fee and additional charges that the new lender may impose and ensure they should not affect your loan amount. This helps to save significantly on your interest payout while keeping the loan tenure the same. 

Conclusion:

Although you should have a clear repayment structure planned before applying for the loan, it is also imperative to adapt to the situation and look for a better solution as time passes. You can even ask the banks to provide additional discounts or offers if possible. If you are an existing customer at the bank, the processing fee can be lowered or even waived.

Also Read This-Home Loan Advantages