Loan is one of the most beneficial and equally supportive form of handling the huge investments that comes associated with purchasing any asset, especially property. Home loans are one of the most common and high in demand loan facility when one is studying to buy their house. First time buyers are often confused with the period of loan facility they should opt for. However, it becomes totally depended on the kind of investment one is looking for and the associated repayment fund they can afford. Similarly, repaying the purchase loan is an equally important part of the entire loan cycle. Faster is the loan repayment, faster will with be your loan closer. Thus, it is always beneficial to close your purchase loans, as soon as possible by opting for fast mortgage closings.
Methods to close your loans
There are several ways to close your loans, such as-
- Firstly, loans can be regularly repaid till the duration of the loan is completed to reduce the debt burden, gradually.
- Loans can also be prepaid, completely.
- Part of your loan can also be prepaid and later the repayment procedure can be followed.
How to repay your home loan faster?
If you are planning to close your house purchase loan faster, its better to always plan in advance. There are a few things you need to keep in mind and practice in order to close your loan faster but with complete ease, as well.
Here is a list to help!
- Maximize your down payment
Paying the maximum down payment for the house you plan to purchase is always the first and best way to handle closing your loan fast. In contrast to going for maximum loan amount, it’s always better to maximize your down payment. This will automatically bring down your principal loan amount, the added interest, and the overall EMI burden. In case you have some non-performing assets, it’s better to get them liquidated and pay the down payment such that your debt burden gets reduced in the future.
- Make sure to pick a lender with lower interest rates
This can be a very crucial factor for anyone trying to borrow a loan. Despite of several banks, government and non-government lenders and Housing Finance Companies, it is very important to pick the best one for you. Make sure to complete your overall research and compare the viability and interest charged by different lenders to pick the apt lender for you. A good value loan is only the one that comes with lower rate of interest, so that one is able to clear it off, soon. This can only happen when you have a considerable lender by your side.
- Additional fees and charges are a part of your loan, keep them in consideration
It isn’t just the lower interest rates that matter when it come to a home loan but, there are several additional charges and fees associated, throughout. These are a part of your entire loan clearance process. Thus, before you finalize your lender, make sure to check on all such accounts. Additional charges might include- processing fees, late payment penalty, along with some hidden fees. This can make a make a considerable amount difference. Make sure you have validated for all such costs in advance to help close your loan, faster.
- If possible, increase your EMI amount
Increasing your EMI amount is the simplest yet most effective way to close your loan soon. In case, you get a good increment or get an income increase from other sources, make sure to invest it in the process of paying your loans faster and closing the same. With reduced tenure, the overall amount will automatically get reduced.
- Use part-payment scheme
You must keep in your mind that part payment schemes are supported by several lenders. They do not charge any additional amount for a particular amount of the part-payment on home loans associated with floating interest rate. This is why, one can massively cut down their home loan through part-payment. So, whenever you have some surplus amount in hand, it is better to go for part-payments.
- Choose the loan tenure very wisely
Closure of any type of loan solely depends on your loan tenure. Paying higher EMIs can play a prime part in closing the loan faster by clearing your debts, sooner. Also, with shorter loan tenure, lower interest will be charged on your loan amount which makes your loan closing, faster.
Benefits of repaying your home loan sooner:
Your faster repayment isn’t just associated with reduced loan tenure but there are a number of other benefits that comes associated with it. Sooner you close your loan, better is your financial stability and other things. Hence, repaying your home loan fast is a perfect way to save massively on the interest you would have paid otherwise.
However, here are a few other notable benefits associated with faster loan repayments-
- Helps in becoming debt-free sooner, giving way to better investment opportunities and need fulfillment.
- Dislike other loan types, the borrower doesn’t need to pay any additional part-payment charges under the part-payment process to the lender even for loans with floating interest rates. Flexibility is allowed to a particular extent.
- Paying the EMIs on time or going for pre-payment helps in improving your overall credit score.
- With good credit score and history, you attain a better debt-to-income ratio, which turns to be quite beneficial in getting better eligibility for new loans.
- Fast closures will avoid any chances of missing or delaying the deadlines of EMI.
- This automatically reduces all types of financial stress.
- With loan-free financial status, you will be relieved and this will lead to a stronger financial position.
This is why, closing your loan by paying off the debt is highly important. Use the above mentioned tips to help you close your non-government or government refinance programs based loan, faster.
