How To Prepay Your Loan And Save Money On Mortgage Loans In Hyderabad.

A home directly adds to your assets and, at the same time, provides you with the feeling of contentment. Taking a home loan to purchase a house for residential purposes is always a wise choice as it ends the lousy cycle of heavy rent payments and gives you a place you can call your own. But, it is essential to choose the right type of home loan with a suitable period and competitive interest rate. It would be best to plan your expenses beforehand to pay the EMIs on time. But, paying the EMIs is not your target; you should consider prepaying your home loan either partially or in whole to reduce the financial burden earlier than expected.

Here are a few innovative ways to help you prepay your mortgage loans in Hyderabad:

1. Pre-EMI Plans are a trap: 

Many banks, as well as builders, offer the pre-EMI plan with particular houses. In this, you will need to pay only the interest component as long as the house is under construction, and once you shift to the new home after completion, then the normal EMIs, interest, and principal repayment will start. You should select the pre-EMI plan if and only if you have funds issues because, in this case, your actual loan does not even decrease by a penny. Paying EMIs regularly from the start will reduce the principal amount also, which is beneficial in the long run.

2. Disposable Income: 

The experts recommend maintaining your income-to-debt ratio if your disposable income increases. If your income increases, you should also increase your EMI in that ratio to pay off the loan early. This will also reduce your extra expenses when the salary increases. Any reduction in EMI only affects the interest component while keeping the principal untouched. Therefore, if the interest rates are decreasing, opt for reducing the period instead of EMIs, as it will also reduce the principal amount. It also helps in the prepaying mortgage.

3. Windfall Gains Considered: 

To pre-close your mortgage loan, consider your windfall gains and one-time payments toward the repayment. One-time payments may include yearly bonuses as well as incentives etc. Windfall gains may be in the form of winning a lottery, unforeseen profits, etc. These gains help you make partial bulk payments, thus significantly reducing the mortgage and early payments.

4. Save for Pre-payment: 

Start regular monthly savings for making some bulk pre-payment of your mortgage loan. For example, suppose you plan to prepay sixty thousand next year and start saving five thousand every month. A recurring deposit can be an excellent option for this savings. This strategic payment plan can help you in your monthly savings towards an annual pre-payment which reduces the period and the EMI payments.

5. Overdraft application: 

Many innovative financial facilities are available in the market to help you prepay your home loan. One such facility is a mortgage loan overdraft. Suppose you have more income after making monthly EMI payments. In that case, you can go for a mortgage loan overdraft facility where you can deposit the amount in your loan account with the flexibility of 

withdrawing it whenever needed. This will eventually reduce the loan period.

If you want to know more about the pre-payment of your mortgage loan, visit Loans Paradise today and talk with our experts!