{"id":3274,"date":"2018-11-24T09:00:41","date_gmt":"2018-11-24T03:30:41","guid":{"rendered":"http:\/\/capitalante.com\/?p=3274"},"modified":"2019-02-27T18:51:42","modified_gmt":"2019-02-27T13:21:42","slug":"how-to-repay-your-home-loan-faster","status":"publish","type":"post","link":"https:\/\/capitalante.com\/how-to-repay-your-home-loan-faster\/","title":{"rendered":"How to Repay Your Home Loan Faster"},"content":{"rendered":"

With the economic progression of India and on the wings of home loans at an easy and affordable interest rate and various initiatives by Government of India\u2019s project \u2018housing for all\u2019, people take home loans and build their nests. Usually, an individual taking loan builds his\/her own nest on easy EMI option either a monthly or quarterly basis from banks or any other financial institutions. After the withdrawal of home loan, people get trapped into a vicious cycle. Earlier, I have mentioned in<\/g> various occasions the benefits of getting debt free. It is advised that you should pay off your home loan as early as possible. Here we will discuss how to repay your home loan faster.<\/span><\/p>\n

Increase the EMI amount i.e. Step Up EMI<\/strong><\/span><\/h6>\n

The shorter the term of repay<\/g> of the loan amount is the lesser the amount you have to pay. Suppose, you receive a monthly salary of Rs. 50,000\/-. You have taken a home loan of Rs. 40 lakh for a term of 20 years at an interest rate of 8% per annum. In this case, you will be subject to pay around Rs. 40 lakh including the amount and interest. So, your monthly installment or EMI will be approximately Rs. 16,728\/-. It means you are paying 33% of your salary to repay your home loan.<\/span><\/p>\n\n\n\n\n\n\n\n\n
Loan amount<\/span><\/td>\nRs. 20,00,000\/-<\/span><\/td>\n<\/tr>\n
Principle paid<\/span><\/td>\nRs. 20,00,000\/-<\/span><\/td>\n<\/tr>\n
Interest paid<\/span><\/td>\nRs. 20,14,914\/-<\/span><\/td>\n<\/tr>\n
Total repayment paid<\/span><\/td>\nRs. 40,14,914<\/span><\/td>\n<\/tr>\n
Monthly repayment EMI<\/span><\/td>\nRs. 16,728\/-<\/span><\/td>\n<\/tr>\n
Loan Term<\/span><\/td>\n20 years<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Now let\u2019s assume your income is getting increased by 10% every year. It is advised that you should take this salary hike as an opportunity to repay your home loan quickly. If you hike your EMI by 10% on yearly basis, you are supposed to repay your home loan by a tenure of 1 year shorter and thus you can save Rs. 2 lakh.<\/span><\/p>\n\n\n\n\n\n\n\n\n
Loan amount<\/span><\/td>\nRs. 20,00,000\/-<\/span><\/td>\n<\/tr>\n
Principle paid<\/span><\/td>\nRs. 20,00,000\/-<\/span><\/td>\n<\/tr>\n
Interest paid<\/span><\/td>\nRs. 18,14,914\/-<\/span><\/td>\n<\/tr>\n
Total repayment paid<\/span><\/td>\nRs. 38,14,914<\/span><\/td>\n<\/tr>\n
Interest saved<\/span><\/td>\nRs. 2 Lakh<\/span><\/td>\n<\/tr>\n
Loan tenure<\/span><\/td>\n19 years<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
Make extra payment with bonus or incentives<\/strong><\/span><\/h6>\n

Job holders irrespective of govt. or private sectors receive some extra emoluments namely bonus, incentives etc. throughout a year. So, whenever, you receive some bonus or extra emoluments, just use this corpus to pay off your home loan. You can use this money to repay the debt at a time. If you receive Rs. 50,000\/- year-on-year basis and use this money to repay the debt you can save Rs. 2 lakhs on interest and repay your home loan 1 year less than the loan term.<\/span><\/p>\n\n\n\n\n\n\n\n\n
Loan amount<\/span><\/td>\nRs. 20,00,000\/-<\/span><\/td>\n<\/tr>\n
Principle paid<\/span><\/td>\nRs. 20,00,000\/-<\/span><\/td>\n<\/tr>\n
Interest paid<\/span><\/td>\nRs. 28,14,914\/-<\/span><\/td>\n<\/tr>\n
Total repayment paid<\/span><\/td>\nRs. 38,14,914<\/span><\/td>\n<\/tr>\n
Interest saved<\/span><\/td>\nRs. 2 Lakh<\/span><\/td>\n<\/tr>\n
Loan Tenure<\/span><\/td>\n19 years<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
You can give up some luxurious habits<\/span><\/strong><\/h6>\n
Skipping at least 2-weekend dinners in a month<\/strong><\/span><\/h6>\n

There are many families who go out for dining every weekend. If you have such kind of habit you can skip at least two-weekend dinners in a month. You can go out for dinner at alternate weekends. Suppose you are a bank employee having holidays on 2nd<\/sup> and 4th<\/sup> Saturday of a month. You can dine out in 2nd<\/sup> and 4th<\/sup> weekends.<\/span><\/p>\n

We assume your family consists of four members including self, spouse, and two children. Usually, the cost of every weekend dinner is around Rs. 1000\/- per week.<\/span><\/p>\n

Assuming 4 weekends in a month you approximately spend Rs. 1000\u00d74 = Rs. 4000\/- by dining out each weekend.<\/span><\/p>\n

If you dine out for 2 weekends in a month then your cost is = Rs. 1000\u00d72 = Rs. 2000.<\/span><\/p>\n

So, by skipping two-weekend dinners you can save around = Rs. 2000\/- per month i.e., Rs. 24000\/- per year.<\/span><\/p>\n