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Should I make a Home Loan Prepayment or not? If you decide after considering these 5 things, you will not regret the decision.


When you voluntarily pay more amount than your EMI to the bank, it is called pre-payment. Home loan prepayment can be made partially or completely. The best way to do this is that whenever you get money collected from somewhere, you keep depositing it in the home loan account. Apart from this, apart from EMI, you can also make regular pre-payments of Rs 2, 3,4, or 5 thousand every month as per your capacity.

Apart from paying EMI every month, when you deposit a lump sum amount in the bank as prepayment, the amount of prepayment is deducted from your principal amount. This reduces your principal amount. When you repay the loan ahead of time through loan prepayment, you can save lakhs of rupees in interest. Apart from this, as the principal amount reduces, your EMI becomes smaller. At the same time, your credit score also improves. Loan prepayment assures the lender that you are fully capable of repaying the loan. In such a situation, if you ever need to take a loan in the future, it is easily available.

People generally do not have to pay any charges on prepayment of their home loans availed at floating rates. But still, as a precaution, you must take this information before making a loan prepayment. First, know about all the terms and conditions from your lenders and then decide on loan prepayment.

If apart from a home loan, you have also taken a personal loan car loan, or any other loan, then in such a situation you should close the other loan before the home loan because the interest on all these loans is higher than the home loan.

This emergency fund should not be used at all for home loan prepayment. Due to this, you may have to face problems in the future.

Take the decision of home loan prepayment considering your family responsibilities and financial situation. Do not make home loan prepayment with your FD or policy money.

Home loan is for 20-30 years. In such a situation, when the decision for prepayment is taken is an important factor. If the loan is paid early, interest worth lakhs of rupees will be saved. This can reduce your EMI. If you make the late prepayment, it would be better if you invest the additional funds elsewhere and repay the home loan within the predetermined period.

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