Want To Reduce Home Loan Tenure and Interest Payments? Learn Two Actionable Ways!


The home loan interest rate and loan tenure play a vital role in home loan repayment. If not appropriately managed, there can be a lot of burden of repayment on a borrower. Thus, home loan borrowers must keep monitoring the interest rate and tenure of their housing loan. It will help them to know how much they are paying and what the current market is charging.

Some online portals and websites provide a summarised view of housing loan interest rate. You can view and compare processing fee, loan tenure and other charges that different lenders are offering. So, before availing a home loan, the borrowers must do their research to make sure they get the best deal.

After acquiring the home loan, here are the two actionable ways to reduce the home loan burden:

1. Prepay Early:

Prepayment is an effective way of reducing home loan burden. Loan borrowers can easily save interest by starting prepayments from the first year of home loan. Prepaying EMIs at later stages won’t save you much interest on the house loan. Also, note down that there are no charges on prepayment for home loans with floating ROI. Moreover, the prepayment amount must be equivalent to at least two EMIs. It’s best to check your home loan eligibility and also calculate EMIs through housing loan EMI calculator.

For examples, if you have availed a house loan of INR 30 lakh for 5 years at 10% interest rate per annum and tenure of 20 years. By the 5th year, you made a prepayment of INR 2 lakh. It would lead to your interest in saving of INR 596,254 and loan tenure reduction from 240 months (20 years) to 213 months.

Home loan borrowers have the option of prepaying the loan. It helps to reduce the maximum tenure for a home loan on the floating interest rate, as lenders do not levy prepayment charges. But for fixed-rate home loans, you have to ensure that the overall savings on interest component via prepayment outweigh charges of prepayment of the loan.

2. Don’t Pay More Than Your EMI:

If a lender increases the interest rate on a home loan, it’s better to increase the EMI amount. Borrowers can easily reduce their total interest rate in the long run. For effectively managing EMI home loan, the borrower must keep less than 50% of their monthly income. It will increase their EMI whenever they want without any pressure. Increasing EMI amount is a good way to reduce loan tenure, as higher EMI means faster loan repayment.

Besides, you must time your EMIs well. Make use of house loan calculator to know the EMIs you have to pay. After that, start paying EMIs near the salary date, instead of the middle or end of the month. This way the borrower gets to escape any additional charges that may arise because of non-payment of their due amount.

For home loan borrowers who are looking to manage their home loan repayments, these two tips are useful in reducing the burden of home loan. Apart from this, conduct thorough market research to find the right home loan lender. You will get one offering an attractive rate of interest and affordable EMI options.