What are the ways to prepay home loans?

What are the ways to prepay home loans?

Being in debt is never a good idea as it affects your financial health. When it comes to a home loan, banks and non-banking financial companies’ prepayment facilities conveniently reduces the equated monthly instalment burden, making it favourable for borrowers. The moment you decide to do prepayment, your interest rates lower as well. This brings down the overall borrowing costs.

Prepayment is getting done with the loan before the term. You can either do it partially or entirely. Hence, when you prepay, the EMI reduces. The best part is the home loan calculator available on the lender’s website provides a clear picture of the same. Sometimes, prepayment gives the flexibility of reduced tenure as well.

When to opt for prepayment?

It is best to do so when you have a surplus amount with you. For instance, when you receive a bonus or an existing investment matures, you can do prepayment. Housing loans are long-term, and the interest rates pay-out is more, making the overall borrowing cost high. Hence, when you repay the loan early on, you save the amount you would otherwise pay for interests.

For prepayment purpose, you can use the home loan EMI calculator . Besides understanding how much amount you can prepay, there are some ways to get it done. You can start with a small prepayment amount and then gradually increase it. This motivates you for the future as well. They are as follows –


Taking out a home loan is a massive commitment that lasts up to 30 years. So, it is better to save some usually after paying the EMIs. If you combine your savings for a few months, you can use them for prepaying. This not only reduces the payable EMIs but the duration of the loan too. When you do so more than once, it can save you a lot of money.

Increases EMI & reduces the tenure

If you cannot accumulate funds through savings, you can still prepay the loan before the term ends. This gets done by increasing the monthly instalments. With some permutations and combinations on the EMI calculator for home loan, you can increase the EMI payable. This also saves a lot of interests.

Set your goals

While prepayment offers peace of mind and saves home loan interest rate, you cannot ignore your other goals. With prepayment in mind, you should set your financial goals concerning financial success. Selecting the right plans makes the road map clear for achieving your desired targets. Do not only focus on prepayment but also consider other goals such as child education and retirement, which is equally important.

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Christophe Rude

Christophe Rude

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