4 Ways To Prepay Your Property Loan

Mozam By Mozam, 27th Jan 2018 | Follow this author | RSS Feed | Short URL http://nut.bz/lf3uwmgl/
Posted in Wikinut>Business>Accounting & Finance

Prepaying your loan for property is always a good idea. After all, being in debt is not a very good place to be and the faster you get out of it, the better. If you are worried about prepayment charges, you shouldn’t be. This is because reducing the principal amount will also reduce the interest payable, when combined it makes for an easy way to get out of debt quickly

This Article Will Give You 4 Ways To Prepay Your Loan Taken To Buy Property.

The first way is to increase your EMI as your salary increases.

This is a very smart way to prepay your loan and doesn’t even invite any prepayment charges. It also very viable as your salary is bound to increase and instead of spending this salary on gadgets or vacations, channelize it towards your prepaying your loan. An increased EMI will shorten the loan tenure and help you get out of debt quickly.

Divert annual bonuses & incentives towards your property loan.

Most of us receive bonuses every year. These bonuses can be as high as 10 or 20 percent of our annual salaries. Some of us even receive incentives for excellent work done. Instead of using these of r general expenses, you should try diverting them as a prepayment amount towards your loan.

Save to prepay your property loan.

One can also take out a tiny piece of their salary every month, save this amount for a year and use it to make a prepayment. Taking this one step ahead would mean investing this small amount into recurring deposits or debt-linked mutual funds for a year and using that amount to prepay the loan.

Say you put aside Rs. 5,000 every month and invest in a recurring deposit. At the end of one year you should have at least Rs. 66,000. This amount could be even more if you invest in debt-linked mutual funds.

Keep refinance as an option on the table.

When refinance your loan, also known as a property loan balance transfer, you will receive a lower interest rate. This should give you two options, paying smaller EMIs over the same tenure or paying slightly higher EMIs over a shortened tenure.

At the end of the day, if your finances are sound and you can afford to make prepayment towards your loan, then don’t hesitate. This is because it is of paramount important to get out of debt and it should a priority to out of debt as soon as possible. Property loan being a substantial amount of debt, you should make all attempts to finish it off quickly.

However, it is important to give proper attention to prepayment charges before you do so. Ensure that the benefit of the prepayment out-weighs the cost of prepaying. If you wish to prepay your loan and need further assistance, speak to a financial expert as soon as possible, he or she might provide you some better direction as to going about prepaying your loan.

Tags

Loan Against Property, Property Loan

Meet the author

author avatar Mozam
Mozam Khan is a Profession blogger since 2015, He has been written and Publishing blog and article on home loan, home loan interest and finance services.

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