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Top Benefits of Repaying Your Housing Loan Sooner: A Practical Guide

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Repayment of housing loan is an important financial decision that every home buyer should make, sooner rather than later. The right strategy for repayment of housing loan is essential not only for financial stability but also for peace of mind. With interest rates fluctuating and home prices escalating, it can be difficult to decide whether or not to repay the home loan early. However, an early repayment of housing loan can prove beneficial in more ways than one. Let’s take a deeper look at why it is important to consider repayment of housing loan sooner rather than later.

Home Loan EMI:

Every home buyer needs to calculate the Home Loan EMI (Equated Monthly Installments) before borrowing from any lending institution. The EMI is calculated on the basis of the principal amount, housing loan interest rate and the tenure of the loan. It is a fixed monthly payment that needs to be paid before the due date. A prepayment of the housing loan can significantly reduce the EMI and result in considerable savings. EMI is one of the most important factors to consider while planning for repayment of housing loan.

Housing Loan Interest Rate:

The amount of interest paid on a housing loan is a significant part of the total repayment. The housing loan interest rate charged by the lending bank or financial institution is a vital determinant of the amount of interest paid. The higher the interest rate, the higher will be the interest paid. A prepayment of the loan can not only help reduce the overall repayment amount but also help in easy management of the debt. Prepayment of the housing loan can significantly reduce the housing loan interest rate applicable on the outstanding loan amount.

Home Finance:

The repayment of housing loan requires proper financial planning, and it is vital to select the right home finance option. Home finance can be either secured or unsecured. Secured finance is when a property is used as collateral, and the loan amount is sanctioned in proportion to the value of the property. Unsecured finance is given without any collateral, but interest rates are higher, given the higher associated risks. In case of a secured loan, prepayment can reduce the tenure and also the housing loan interest rate significantly.

LiveMint.com recently published an informative article titled “Should you prepay your home loan? Experts explain the pros and cons” which delved into the various nuances of the housing loan repayment process. According to the article, prepayment of the housing loan should be considered, especially when there are surplus funds available, which can be used to reduce the total housing loan interest rate.

Repayment of a housing loan requires proper financial planning, and it is vital to choose the right financial product. A prepayment of the housing loan can tremendously reduce the repayment burden and provide peace of mind. With reduced EMI and interest, it’s easier to manage the housing loan and keep up with the monthly payments without any stress.

Conclusion

In conclusion, the repayment of housing loan is essential for financial stability and peace of mind. An early prepayment of the housing loan can significantly reduce the EMI, housing loan interest rate and save you considerable amounts in the long term. With surplus funds, prepaying your home loan should be considered, as it can help you pay off your mortgage much quicker than expected. In the end, a smart financial plan for repayment of housing loan can lead to a prosperous and debt-free future.

nancy Ahuja
nancy Ahujahttps://finance-plus-investments.blogspot.com
I am an independent girl and running my business for the last 5 years and also a blogger.I love to explore new ideas for business and self-development. I love to write on business and finance.

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