How can one small habit of yours reduce your home loan by half? Know 5 effective and practical ways to become loan free..

In today's time, with property prices increasing rapidly, people are resorting to home loans to buy a house. But the interest rates of home loans often trouble a person. So if you want to reduce the burden of your home loan and want to repay it as soon as possible, then by adopting some easy methods, you can easily save lakhs of rupees in interest. So we will know the 5 ways by which interest can be saved.

1. Make a pre-payment

Whenever you get some extra money, such as an annual bonus or any other unexpected income, it should always be used to make a partial payment of your home loan. This easily reduces your principal amount, on which interest is calculated. This not only reduces your loan period, but the total amount to be paid as interest also reduces significantly.

2. Increase the EMI amount

If your salary has increased, you can increase your EMI (Equated Monthly Installment) amount little by little. Yes, when your salary increases, you can add a part of that increased income to the EMI. Even if this growth is small, like ₹ 2,000 or ₹ 5,000, it can reduce the timing of your loan by a few years and save a lot in interest.

3. Choose a shorter tenure

If your income is stable and you can pay more EMIs, you can choose the option of a shorter tenure while taking the loan. Choosing a shorter tenure may increase your monthly EMI a little, but compared to a longer tenure, you have to pay much less interest overall. This makes you loan-free sooner.

4. Home Loan Balance Transfer
If another bank or financial institution is offering you a home loan at a lower interest rate than your existing bank, then you can also think about transferring your loan. This can be beneficial for you to a great extent because at a lower interest rate, you are able to pay more principal in the same EMI, which can finish the loan quickly.

5. Take advantage of tax benefits
You can also make proper use of the tax benefits available on your home loan. Tax exemption can be available on the payment of principal under section 80C of the Income Tax Act and on the payment of interest under section 24 (b). So you can use the money received from these exemptions to make extra pre-payment, which can help in finishing your loan faster.

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