Taking a home loan is one of the biggest commitments that you will be making. A home loan provides a smart way to buy your dream house without breaking your savings. However, when paying home loan monthly installments, it is important to plan accordingly to manage the unanticipated overheads. Another factor is that home loans stretch for a really long time. While you get tax benefits, it impacts the finances, both present, and future.
But if you do not wish to stretch your loan for too long, you can reduce the tenure. For the same, you will need to know how to calculate home loan interest so that you can figure out the EMIs you will be paying, and based on that, you can decide the tenure. Here are some effective tips that will help you reduce the tenure of the loan.
- Choose Shorter Tenure In The Beginning
Once you have figured out home loan interest rates offered by different providers, select the one which allows you to pick a shorter home loan period. But this would mean that you have to pay a higher repayment amount. The shorter the home loan period, the higher will be the interest rate. So, assess your financial conditions properly prior to selecting the tenure.
Ensure that the EMIs do not force you to make a compromise on your existing lifestyle and financial goals. With longer tenure, you can pay less money monthly, but it also means paying more interest costs for a long time. Understand how to calculate home loan interest rate based on which you can decide a feasible tenure.
- Gradually Increase Your EMI
If you are a salaried employee, then you are likely to get an annual hike, so you can increase the amount of EMI gradually. `Regularly increasing your amount of EMI will reduce the loan tenure to a significant extent. By paying more in the EMI amount, you will reduce the overall amount of outstanding loans. You can check the current interest rates based on which you increase the EMI and decide how much impact the new amount will have on your loan tenure.
- Consider Home Loan Balance Transfer
You can opt for a home loan transfer if you find that the other lenders are extending lower interest rates and flexible terms of services. When transferring your home loan, keep the tenure the same as the remaining period of the current home loan. If you know how to calculate the home loan interest rate, then it will be easier for you to calculate the EMIs. Considering that you have shifted to a home loan with a lower interest rate, you can increase the EMI amount while reducing the home loan period.
Above are some effective ways that will help you lower your home loan tenure without putting a financial strain on you. If you manage to collect some amount apart from your savings, try to pay off the loan amount. Try to make a plan to save a particular amount solely for the repayment of the loan by a specific time period.