🚂 Current Fix Deposit Rates 🌞 SBI - General Citizen 3% to 7.10% Senior Citizen - 3.60% to 7.60% 🌞 HDFC - General - 3.00% to 7.40% Senior Citizen - 3.50% to 7.90% 🌞 ICICI - General - 3% to 7.10% Senior Citizen - 3.50% to 7.60% 🌞 PNB - General - 3.50% to 7.25% Senior Citizen - 4% to 7.75% 🌞 Kotak Mahindra - General - 2.75% to 7.20% Senior Citizen - 3.25% to 7.70% 🌞 Axis - General - 3.50% to 7.10% Senior Citizen - 3.50% to 7.85% 🌞 Bank of Baroda - General - 3% to 7.25% Senior Citizen - 3.50% to 7.55% 🚂 Current Recurring Deposit Rates 🌞 SBI - General 4.40% to 5.50% Senior Citizen 4.90% to 6.20% 🌞 ICICI - General 3.50% to 5.50% Senior Citizen 4% to 6.30% 🌞 HDFC - General 4.40% to 5.50% Senior Citizen 4.90% to 6.25% 🌞 KOTAK - General 4.30% to 5.20% Senior Citizen 4.80% to 5.70% 🌞 AXIS - General 4.40% to 5.75% Senior Citizen 4.65% to 6.50% 🌞 IDBI - General 7% to 7.15% Senior Citizen 7.50% to 7.65% ☁️ National Pension Scheme - 9% to 12% pa ☁️ Employees Provident Fund - 8.15% pa ☁️ Public Provident Fund - 7.1% pa How to repay home loan faster

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How to repay home loan faster

 

How to repay home loan early or faster?

Repaying a home loan as early as possible can save you a significant amount of money on interest. Here are some strategies to help you pay off your home loan faster:

1. Make Extra Payments

  • Regular Extra Payments: Pay more than the minimum monthly payment. Additional amounts can make a big difference over the time.
  • Lump-Sum Payments: Whenever you receive a bonus, tax refund, or any extra income, put it towards your loan.

2. Increase Your Monthly Payments

  • Round Up Payments: Round your monthly payment to the nearest hundred dollars. For example, if your payment is Rs. 42,000, pay Rs. 45000.
  • Pay More Frequently: If possible, switch from monthly payments to bi-weekly payments. This results in an extra payment each year.

3. Refinance Your Loan

  • Lower Interest Rate: If interest rates have dropped since you took out your loan, consider refinancing to a lower rate.
  • Shorter Loan Term: Refinancing to a shorter loan term (e.g., from 20 years to 15 years) will increase your monthly payments but reduce the total interest paid.

4. Reduce Expenses

  • Budgeting: Create a budget to track your expenses and identify areas where you can cut back.
  • Lifestyle Changes: Reduce discretionary spending (e.g., dining out, entertainment, picnic) and redirect the savings towards your loan.

5. Extra Income

  • Bonuses and Raises: Allocate a portion of any work bonuses or salary raises to your mortgage payments.
  • Tax Refunds: Use your tax refunds to make additional payments.

6. Avoid New Debt

  • Minimize Other Loans: Avoid taking on new debt, such as car loans or credit card debt, which could impact your ability to make extra mortgage payments.
  • Prioritize High-Interest Debt: If you have other high-interest debt, consider paying it off first before making extra mortgage payments.

7. Check for Prepayment Penalties

  • Loan Terms: Review your loan agreement to ensure there are no penalties for making extra payments or paying off the loan early.

8. Utilize Mortgage Accelerators

  • Mortgage Accelerator Programs: Some financial institutions offer programs designed to help you pay off your mortgage faster. Research and consider if they are suitable for you.

Example Calculation

To illustrate the impact of extra payments, consider this example:

  • Loan Amount:                   Rs. 40,00,000.00
  • Interest Rate:                               8.75%
  • Loan Term:                       20 years (240 months)                 
  • Monthly Payment:             Rs. 35,348.00                              

Scenario 1: Regular Payments

  • Total Interest Paid:            Rs. 44,83,623.00
  • Total Cost of the Loan:      Rs. 84,83,623.00

Scenario 2: Extra Rs. 9,612.00 per Month                                                        

  • New Monthly Payment:     Rs. 44,960.00
  • New Loan Term:               Approximately 12 years (144 months)                  
  • Total Interest Paid:            Rs. 24,74,222.00
  • Total Cost of the Loan:      Rs. 64,74,222.00

In this scenario, by paying an extra Rs. 9612.00 per month, you save Rs. 20,09,401.00 in interest and pay off the loan 8 years earlier.

Conclusion

Paying off your home loan early requires discipline and strategic financial planning. By making extra payments, refinancing, cutting expenses, and avoiding new debt, you can significantly reduce the term of your loan and save a substantial amount of money on interest.


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