Owning a home is one of life’s biggest milestones, but it comes with a substantial financial responsibility. With real estate prices climbing steadily, home loans have become an essential tool for many Indians to make this dream a reality. Yet, the lengthy repayment period can sometimes make it feel like true ownership is still out of reach.

If you’ve ever wondered how to pay off your home loan faster, you’re not alone. Many homeowners seek the best ways to reduce their home loan tenure and save on overall interest costs. Here are 7 proven strategies to help you repay your home loan quicker in India, easing financial pressure and bringing you closer to becoming debt-free.

1. Opt for a Shorter Loan Tenure

Choosing a shorter loan tenure is one of the most effective ways of accelerating home loan repayment in India. While a longer tenure can make repayment more manageable with lower monthly EMIs, it also increases the overall interest paid during the loan tenure. On the other hand, a shorter tenure increases your EMI but it can also help you save total interest outgo on home loan repayments.

If you are financially stable and can comfortably manage higher monthly payments, this strategy is a practical way to repay your home loan faster while reducing the interest burden.

2. Make a Higher Down Payment

Making a larger down payment, if possible, is one of the most effective home loan repayment strategies. Typically, lenders fund 80% to 90%* of the property’s value, requiring you to pay the remaining 10% to 20% upfront. By contributing more than the minimum required – say, 20% or more – you can reduce the loan’s principal amount.

A lower principal can not only reduce the overall interest payable but also lowers the lender's risk. This, in turn, may help you negotiate better loan terms, such as a lower interest rate. With a lower principal and favourable rates, you can opt for a shorter tenure to repay your home loan faster.

3. Consider a Home Loan Balance Transfer

If you find another lender offering lower interest rates and better service, transferring your outstanding loan balance to them can be a smart move. By securing a lower interest rate, you may be able to shorten the loan tenure, helping you repay your home loan faster.

However, keep in mind that a successful balance transfer application is subject to your eligibility, creditworthiness, and lender policies. Additionally, the transfer process may involve associated costs such as processing fees and application charges. Before proceeding, make sure that the total cost of the transfer does not outweigh the potential savings.

4. Prepay Your Home Loan if Possible

Prepayments are an excellent way to reduce your home loan's principal and, consequently, the total interest costs. If you’ve received windfalls like tax refunds, inheritance, or capital gains, consider using these funds to prepay your loan.

Many lenders offer prepayment options for home loans in India, without penalties or charges for loans with floating interest rates. However, it’s always prudent to check your loan agreement for any lender-specific terms before proceeding with prepayment.

5. Leverage Tax Benefits

Home loans offer significant tax benefits that can help ease your repayment burden. Under Section 80C of the Income Tax Act, you can claim a deduction of up to INR 1.5 lakh annually on the principal repayment. Under Section 24(b), you can claim deductions of up to INR 2 lakhs on the interest paid for a self-occupied property. For let-out or rented properties, there is no cap on interest deductions.

Additionally, Section 80EE provides an extra deduction of up to INR 50,000 on interest paid by first-time homebuyers, provided certain conditions are met, such as the loan amount not exceeding INR 35 lakhs and the property value being INR 50 lakhs or less. 

Leveraging these benefits when filing your taxes can free up more of your income, making it easier to manage EMIs and pay off your home loan faster. Be sure to check the eligibility criteria and ensure compliance with the conditions to maximise these deductions.

6. Avoid Missing Payments

Late payments typically incur penalties and may lead to compounding interest on the outstanding amount, further raising the total loan cost. Additionally, missed payments can hurt your credit score, which can negatively affect your ability to secure future loans or lead to higher interest rates on those loans.

It is essential to prioritise home loan repayments to avoid these financial setbacks. If you're facing difficulties in making timely payments, reach out to your lender as soon as possible to explore options like loan restructuring or modifying repayment terms.

7. Monitor Your Credit Score

A good credit score is essential not only for securing loans at lower interest rates but also for renegotiating better terms on your existing home loan. A strong credit score reflects your financial reliability, giving you an advantage when negotiating reduced interest rates with your lender. Even a minor reduction in the interest rate can lead to substantial savings by lowering your EMI and helping you pay off your home loan faster. Regularly monitor your credit score and take the necessary steps to improve it if needed.

Summing up

By following the tips for early loan settlement discussed above, you can effectively manage home loan repayment and reduce your debt burden faster. However, it’s important to carefully assess your financial situation before adopting strategies like prepayment or opting for a shorter loan tenure. Thoughtful planning and informed decision-making are crucial for repaying a home loan faster without straining your finances.

Ready to start your homeownership journey? SMFG Grihashakti offers home loans up to INR 1 crore* with competitive interest rates starting at just 10%* per annum. Our flexible tenures extend up to 30 years*, allowing you to choose a repayment schedule that best suits your financial capacity and goals. Use our home loan EMI calculator to estimate your monthly payments and apply online today!

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