A home loan is a long-term obligation wherein repayments can run up to 30 years and beyond. This loan gives you the privilege to own a home with availing tax benefits but might be in control of the big chunk of your finances up to the near future. it also modifies and dictates your present and future finances. Paying off your home loan as soon as possible may be a great move. Carefully assess and manage your monthly installments and repayment tenure if you plan to pay off your existing home loan earlier than agreed. Here are some smart moves on how you can do such:
Opt for the shortest possible home loan term
The home loan term is one of the key aspects to consider when you are considering to pay off your loan earlier than what was agreed. However, a shorter payment term would also mean that your scheduled r payments would also be much higher. Terms cause a direct impact on your home loans equated to monthly installments. If you opt to shorten the term, then you must prepare higher monthly installments and vice versa. It would be best to assess your current financial situation before choosing the loan term to avoid compromising your financial goals and lifestyle. Note that in choosing a longer-term, you can make your payments more comfortably and no need to stretch out your finances that much. But this will also lead to higher interest costs.
Reduce your home loan balance with a lump-sum payment
Another smart move is to make lump-sum payments to your home loan when possible. Let’s say you earned a significant amount of bonus or commission, or inherited money, or sold another property, it would be ideal to use the money in paying a big portion of your home loan.
Increase your monthly installments with time
Home loan, so far, has the longest installment term. Some larger banks offer a maximum of 40 years loan term. During such a period, the income of the borrower is expected to increase, allowing him to gradually increase his equated monthly installments. Home loan prepayment through higher monthly installments would lessen your outstanding loan and might be a big help in paying off loans early.
Make advance payment whenever possible
Home loan advance payment from time to time is also a quick way to lower down your loan liability, as it lessens your loan terms. It also a great way to cut down the total interest incurred by the loan. Some lenders also offer a great discount when you get to fully paid your loan earlier than scheduled which you can save up a bit penny.
Whatever you choose, just make sure that you have weighed all available options and make that smart move to get a step closer to paying off your home loan.
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