If you live in Pune, you have borrowed money to fund your home purchase. After all, the dream of owning your own house can be expensive. However, it does not always make sense to repay your loan as quickly as possible. After all, repaying your best home loans in Pune faster means paying more upfront and taking longer to build equity in your property. But then again, there’s a flip side to everything. If you pay back your loan faster than expected, this could help you avoid extra charges or penalties from the bank for early repayment. In other words, repaying your loan sooner could actually work out in your favor in the long run. Let’s look at some key tips that could help you repay your loan faster in Pune:
1) Invest the largest initial sum possible:
Make the largest down payment you can manage rather than qualifying out the highest loan you qualify for. The lower the principal amount of your primary home loan in Pune, the lower the interest and EMI you’ll have to pay. A down payment of 20% to 25%, or more if you can afford it, will help you better manage your monthly mortgage payments. You may wish to lower your future debt load by liquidating assets that are not producing the expected returns.
2) Go with the lender who has the lowest interest rate:
Many financial institutions provide reasonable home loan rates in Pune. It is important to shop around and choose the one that best suits your needs. In other words, if your interest rate is low, you’ll have less money to repay, and you’ll be able to pay off your debt faster. Refinancing your mortgage to a new lender at a lower interest rate is an option if you already have a house loan but are paying a high-interest rate.
3) Boost Your Monthly Installment Amount:
After getting a mortgage loan in Pune, if you get a raise or have more disposable income, you can negotiate with your lender to shorten the term of the best home loan lenders in Pune and increase your monthly payment. This strategy is popular among those with steady incomes and is often used to pay off a mortgage sooner. You may pay off your debt faster if you pay even a little bit more each month.
4) Carefully consider the loan term you select:
You can speed up the repayment of your home loan by choosing a shorter repayment period and increasing your monthly EMI payment amount. In addition, you’ll save money on interest payments by reducing your loan’s term. You should keep in mind that the shorter loan period results in higher EMI payments. A longer loan term with manageable EMI payments that can be paid in full or in part whenever extra cash is available is preferable.
5) Seize the Opportunity Offered by the Falling Interest Rate:
When the Reserve Bank of India (RBI) lowers the repo rate, the interest rates on loans generally go in the opposite direction. In this kind of scenario, you have the option of either lowering the EMI or shortening the total loan term. If you are able to pay off your mortgage faster while maintaining the same monthly payment amount, you might consider shortening the term of the loan while maintaining the same payment amount.
6) Money Saved on Taxes:
An expensive home loan comes with a number of tax breaks that add up to significant annual savings. Per Section 24 of the Income Tax Act, 1961, you can deduct up to Rs 2,00,000 in house loan interest payments from your taxable income each financial year. Those with higher income tax rates will gain the most. For house loan interest payments, taxpayers in the 20% tax bracket can deduct up to around Rs 40,000 per year, while those in the 30% tax bracket can deduct up to about Rs 60,000 per year. Furthermore, if the property’s worth is less than Rs. 45 million, you can deduct up to Rs. 50,000 under Section 80EE of the Income Tax Act, 1961, and up to Rs. 1.5 million annually under Section 80C.
7) Make Partial Payments:
In the case of house loans with a variable interest rate, the lenders do not impose any prepayment penalties. You can significantly lower the size of your mortgage by making partial payments. Therefore, whenever you receive extra money, whether it’s a bonus, a present, or some other unexpected source of income, it’s best to use that money toward paying down your mortgage. Before you make any prepayments, you should check with your lender to find out if there are any prepayment fees. Some lenders charge fees after a certain amount or number of partial payments, while others don’t charge any fees at all.
8) Take into Account Any Additional Costs:
You should choose the mortgage lender that has not only the lowest interest rate but also the lowest fees and penalties. Lending processing costs, late payment fees, and other hidden fees can make a big impact, so keep them in mind when comparing lenders. Also, make sure your EMI payments are made on time to prevent additional fees. Late fees on loans of any kind are exorbitant. In addition, your credit score may suffer from your overdue payments, which could result in the denial of future loan applications.
If you have availed of the best home loans in Pune, it is likely that you are worried about how long it will take to pay it back. After all, who wants to wait so long? Fortunately, the above-mentioned ways will assist you in repaying your home loan faster. When you pay off your mortgage early, you free up cash that may be put toward other priorities like saving for retirement, paying for your child’s college or wedding, taking a much-needed vacation, etc. There’s no denying the relieving and liberating effects of settling debts ahead of schedule.