A home loan is considered as a long term loan as these can go around 5-20 years depending on many factors such as a high loan amount, higher rate of interest and lower EMI options. It is considered good if the loan can be taken at an early stage of your career as it gives you much more time to repay off the loan. It helps you to be clear of this burden earlier than retirement. Taking a home loan for a long tenure ensures that you have enough time to repay the loan with an affordable EMI. But this will also mean that you will end up paying more interest until the loan is repaid in full.
There are few ways you can reduce this debt. They are as follows;
You can opt to repay the loan choosing a higher EMI. Firstly, there are two ways you can repay off your loan. One is where the EMI is low and the tenure is long. The other is when you choose to repay your home loan with a higher EMI option and the tenure is short. It is wise to calculate as per your preference and then take a call accordingly.
Prepayment of the loan amount is one of the best choices. If you ever happen to get a bonus/surplus of funds, you can repay a certain amount to the lender in one installment. This has twin benefits as you lower your principal amount and automatically reduce the EMI and interest rate owed to the Bank/NBFC.
By repaying off loans, you can utilize the tax benefits on the principal amount paid to the tune of 1.5 lakhs and also on the interest component up to 2 lakhs. You can use this benefit to reduce your home loan liability and save money.
Considering the effort and planning it takes to avail a home loan, it is better to be ready for any situation. When you log in to Ruloans web portal you can use the loan calculator to analyze the loan amount and how much of interest you will end up paying for a short or long tenure. This also allows you to plan how you want to repay your home loan to the lender.
To know more about how to apply for a home loan