How to pay off your loan faster than expected

Home loans are a kind of expense that runs in the long run and is better to repay as fast as possible. The banks mostly provide rebates to the customers for the repayment of the loans at an early stage. Thus the borrower must take into consideration the repayment of loans at an early stage also to become early debt-free. There are various strategies through which the borrower can repay the debt faster. Proper financial planning is one of the necessary factors in the repayment of loans at a faster rate. The borrower should keep aside some savings in their bank accounts aside so that in case of delay in salaries the borrower should not be able to miss the EMI payments. Maintaining a sufficient bank balance is also a necessary factor as the person who maintains a sufficient bank balance is considered a financially stable person. Repayment of the loans EMI can help an individual improve the CIBIL score which can help in future lending more easily. The borrower if avails joint loan then, in that case, it helps reduce the burden of loans on an individual more easily.

The investment in financial instruments is a necessary factor that can help an individual become financially self-sufficient. Also, the borrower should take into consideration the regular expenses required every month and by reducing those expenses the borrower also has to pay the home loans installments. The home loan installments should not exceed 40-45% of the monthly income. And though the bank approves 80% of the property value as a home loan, the borrower should try to pay the maximum amount as a down payment and avail loans of a minimum value required which reduces the burden of installments and also reduces the repayment value for the loans. The loans can be availed for a maximum tenure of 30 years depending on the age of the borrower. In the case of availing loans for a longer span, the monthly EMI reduces but the interest repayment value increases. Thus the borrower should decide the tenure thoughtfully which should not put a strain on monthly expenses and also the repayment value of the interest on loans should not be exceptionally high. The income tax benefit can be taken by the borrower as long as the borrower repays the loan’s installments.

Following are how the loans can be paid faster than expected

  • Start a SIP along with the loans

The systematic investment plan helps in increasing the value of money which a borrower has as spare money. Investment in financial instruments is beneficial to increase the value of money quickly and gain better returns on investment. The returns gained on investment can be utilized for the faster repayment of loans.

  • Utilize excess income gained for the repayment of loans

Many times an individual gains some extra income like the bonus, incentives, or perks. The extra amount gained can be utilized for the faster repayment of loans. Faster repayments help in saving money in interest repayment and also reduce the tenure of the loans.

  • Inheritance property or any other miscellaneous property

Selling a miscellaneous property can help an individual gain a higher amount of money in hand. Thus the income gained from a property can be utilized to repay the loans faster and reduce the burden on an individual. Thus it is beneficial for the borrower to avail the high amount of rebate on the repayment of loans.

  • Avail loans of a lower amount to make faster repayment

Paying maximum down-payment of loans can help an individual reduce the liability of the loans. Thus the borrower should make maximum down-payments and take a lower amount of loans to ease the burden of loans.

We can conclude that better financial planning and reducing miscellaneous expenses can help in reducing the overall burden of loans on the borrower. The borrower whenever possible should try to repay the loans faster as it helps reduce the burden on repayment of interest amount and also can help the borrower become early debt-free

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