Here are some savvy tips that can help you reduce the principal amount of your home loan.
• Increase EMI: Boosting your Equated Monthly Instalment (EMI) even slightly can work wonders. The extra amount chips away at the principal, helping you save on interest over the long haul.
• Make Bi-Weekly Payments: Instead of paying monthly, consider splitting your monthly EMI into two smaller payments every two weeks. This results in an extra month's payment every year, accelerating principal reduction.
• Lump Sum Payments: Got a bonus or tax refund? Channel that windfall towards your principal. Even a one-time large payment can significantly dent your principal amount.
• Refinance Wisely: If interest rates drop, refinancing your home loan at a lower rate can result in lower EMIs, leaving more to tackle the principal.
• Opt for Shorter Loan Tenure: A shorter loan period often means higher EMIs, but it also translates to paying less interest overall, chipping away at the principal faster.
• Avoid Prepayment Charges: Ensure your loan agreement doesn't come with hefty prepayment penalties. If not, consider making periodic lump sum payments without incurring extra costs.
• Investigate Accounts Linked to the Home Loan: Certain banks offer home loan-linked savings accounts. Any surplus in these accounts is directly adjusted against your loan principal.
Remember, every bit counts. With patience and diligence, you can steadily reduce your home loan's principal amount, inching closer to a debt-free future!
