7 Easy Ways to Repay Your Home Loan Faster

Owning your home outright—sounds like a dream, right? A space that’s truly yours, free from monthly EMIs, where every corner reflects your hard work and aspirations. But with a hefty home loan hanging over your head, that dream might feel like a distant reality, buried under years of repayments and mounting interest. The good news? You don’t have to wait decades to achieve financial freedom. 

Whether you’re a seasoned homeowner or exploring a guide for first-time home buyers, understanding financial tools like a SIP calculator and seeking advice from a stock market advisor can also help you manage your finances more effectively. Let’s explore seven easy ways to make that happen.

Make Extra Repayments

Making extra repayments is one of the most effective methods of repaying home loans faster. By paying more than your scheduled monthly amount, you directly reduce the principal—the original amount you borrowed. This means you’ll pay less interest over time.

Example: Suppose your monthly mortgage repayment is ₹30,000. If you can pay an extra ₹5,000 each month, that’s ₹60,000 additional paid over a year. This extra amount goes straight towards reducing your principal, helping you finish your loan term earlier.

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Switch to Bi-Weekly Payments

Instead of making monthly repayments, consider switching to bi-weekly payments if you wonder how to repay home loans faster. This approach involves paying half of your monthly repayment every two weeks. Since there are 52 weeks a year, this method results in 26 half-payments, equating to 13 full monthly payments annually—one extra payment each year without much effort.

Example: If your monthly repayment is ₹30,000, you’d pay ₹15,000 every two weeks. Over a year, this totals ₹3,90,000 instead of ₹3,60,000, effectively giving you an extra month’s repayment.

Refinance for a Better Rate

Refinancing your home loan means replacing your current loan with a new one, ideally at a lower interest rate. A reduced rate can lead to significant savings over time and thus answer your doubts about how to repay a home loan faster.

How to repay home loan faster by refinancing:

1. Assess Your Current Loan: Understand your existing interest rate, loan term, and any associated fees.

2. Shop Around: Compare offers from various lenders to find a better rate.

3. Calculate Potential Savings: Use a home loan EMI calculator to see how a lower rate impacts repayments.

4. Consider Fees: Be mindful of refinancing fees and ensure the savings outweigh the costs.

5. Apply for the New Loan: Once you’ve found a favorable offer, proceed with the application and use the new loan to pay off the existing one.

Utilize an Offset Account

An offset account is a savings or transaction account linked to your home loan. The balance in this account offsets your loan principal, reducing the interest you pay.

Example: If you have a home loan of ₹50,00,000 and ₹5,00,000 in your offset account, you’ll only be charged interest on ₹45,00,000. This reduction in interest allows more of your repayments to go towards the principal, helping you forget how to repay your home loan faster.

Increase Your EMI with Salary Hikes

As your income grows, consider allocating a portion of your salary increase toward your home loan. Increasing your Equated Monthly Installment (EMI) can reduce the principal more quickly. As a result, you can stop worrying about how to repay a home loan faster.

Example: If you receive a 10% salary hike, channel that extra income into your home loan repayments instead of adjusting your lifestyle to match. This disciplined approach can shave years off your loan term.

Make Lump Sum Payments

Consider making a lump sum payment toward your home loan whenever you receive extra money—be it a bonus, tax refund, or inheritance. This can significantly reduce your principal and the total interest payable.

Example: Receiving a ₹1,00,000 bonus and applying it directly to your loan can substantially affect your repayment timeline.

Opt for a Shorter Loan Tenure

While longer loan tenures mean lower EMIs, they also result in higher interest payments over time. If you are seriously considering how to repay a home loan faster, opt for a shorter loan tenure. This will increase your monthly repayments but will save you considerable interest and help you become debt-free sooner.

Example: A 15-year loan will have higher EMIs than a 30-year loan but will result in significantly less interest paid over the life of the loan.

Conclusion

By implementing these strategies, you can take control of your home loan and move closer to a debt-free future. Every extra payment, wise financial decision, and a small adjustment in your repayment plan bring you one step closer to full homeownership. Remember, even small steps—whether it’s rounding up your EMIs, making an occasional lump sum payment, or switching to bi-weekly installments—can add to significant savings over time. 

If you’re new to homeownership, exploring money tips for first-time home buyers can provide valuable insights. The sooner you start, the more you save, and the faster you can enjoy the peace of mind of owning your home outright. Stay committed, stay consistent, and watch your loan shrink faster than ever imagined. Happy saving!

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