In a recent survey conducted with 1,629 urban homebuyers, it was revealed that 79% of the respondents preferred taking a home loan. 

While borrowing is a significant step toward homeownership, effective repayment is equally crucial for long-term financial health.

This home loan repayment guide explains the process in detail, including its importance, how it works, and practical tips to manage it smoothly.

Understanding the Basics of Home Loan Repayment

Repaying a home loan involves regular Equated Monthly Instalments (EMIs), which are made up of two components – the principal amount and the interest. During the initial years of your loan tenure, a larger portion of your EMI is allocated toward interest payments, with the principal repayment increasing gradually over time due to the amortization schedule.
Online home loan EMI calculators are quite useful when it comes to simplifying home loan repayment plans. Many lenders offer these user-friendly tools, where you can input your loan amount, interest rate, and tenure to instantly calculate your EMI. These tools help you estimate monthly outflows and plan your budget effectively.
However, it's important to note that EMI calculators typically do not account for additional costs such as processing fees, late payment penalties, or value-added services like insurance. Be sure to factor in these expenses when planning your finances.

How to Repay a Home Loan Step-by-Step?

The home loan repayment process typically involves the following steps:

• Keep EMI Payments on Track: Paying your EMIs consistently is critical to avoiding late fees, maintaining a healthy credit score, and ensuring a positive relationship with your lender. Automate payments or set reminders to adhere to deadlines and stay financially disciplined.
  
• Track Your Loan Statement Regularly: Regularly reviewing your loan statement helps you monitor outstanding dues, the interest charged, and repayment progress. It also allows you to identify any discrepancies early and take corrective action if needed.
  
• Consider Making Prepayments: Making prepayments is one of the best ways to repay home loans faster. Prepaying your home loan can significantly reduce the overall loan tenure and interest costs. If you receive extra funds, such as a bonus or unexpected income, consider directing them toward prepayments. According to the RBI guidelines, lenders cannot charge prepayment penalties on floating interest rate home loans for non-business purposes. However, confirm any specific terms and conditions with your lender before proceeding.
  
• Request a No-Dues/No Objection Certificate: Once you’ve fully repaid your home loan, request a No-Dues Certificate (NDC) or a No Objection Certificate (NOC) from your lender. This document officially certifies that your loan has been cleared and protects you in case of any future disputes.
  
• Collect Original Property Documents: After repayment, retrieve any original property documents held by your lender, such as the sale deed and any supporting paperwork. Verify these documents carefully to ensure they are complete and accurate.
  
• Remove the Lender’s Lien on Your Property: When you take a home loan, the lender places a legal claim (lien) on your property. Hence, once your loan is repaid, make sure the lien is formally removed to regain full ownership of your property.

How to Manage Home Loan Repayment Effectively?

Managing home loan repayment effectively requires disciplined financial planning. Here are some tips to help you stay on track:

• Budget Wisely: Allocate a fixed portion of your monthly income to EMIs to ensure timely payments. Cutting down on non-essential expenses can make it easier to integrate home loan repayment into your overall budget without financial strain.
• Build an Emergency Fund: Create a financial buffer equivalent to at least six months of EMIs. This fund acts as a safety net in case of unexpected challenges, ensuring your home loan repayments remain uninterrupted even during challenging times.
• Track Your Progress Routinely: Use online tools like EMI calculators to monitor your outstanding loan balance, interest payments, and remaining tenure. Many lenders also provide online portals where you can conveniently check your loan status and repayment progress. Staying informed helps you plan your finances better and explore options like prepayments or refinancing if needed.

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Conclusion

Repaying a home loan doesn’t have to be stressful if approached systematically. Timely EMI payments, effective budgeting, and making prepayments when possible can go a long way in easing your repayment journey.

Choosing the right lender is equally important for a smooth repayment experience. SMFG Grihashakti offers home loans of up to INR 1 crore* for under-construction, new, and resale properties. Our attractive interest rates and flexible tenures of up to 30 years* are designed to help you realise your dream of homeownership without straining your finances. Use our home loan EMI calculator to estimate your monthly payments and apply online today!