Tips for a stress-free Home Loan Repayment

It has never been easier to obtain a home loan. The higher standard of living coupled with the advancement of technology in the financial arena has made it easier for the millennial generation to get credit in order to purchase a house. However, it can be a burden to pay off a large sum of money for a long tenure. In addition, the lack of financial planning often puts a lot of borrowers in trouble during the course of the home loan. Here is a list of tips that can make your home loan repayment quicker and stress-free.

Home Loan Repayment

  • Make larger EMI Payments – Home loan tenures are on average 15 – 20 years long. During the tenure, your income is likely to increase. Making larger EMI payments consistently, as and when you have a boost in income, will eventually reduce the tenure of the loan, thus reducing your burden considerably.

Generally, it is said that 40 – 50% of your income can be paid towards your EMIs. This is bound to close off your loan faster and will help you get to a better financial position as well. Not to mention that credit bureaus will deem you to be the perfect customer for future loans, making it easier for you to avail credit.

Yet another method to significantly reduce the burden on repaying your home loan is to surge your EMI payments by 5% each year. If 5% is too much of an increase for you, reduce it a lower percentage, but make to increase the EMI amount annually. Apart from merely helping you pay off your debts faster, this will also allow you to save up on the total interest paid, which in case of home loans would add up to a huge amount.

  • Make use of any additional income – Any additional income you may receive like bonuses, gifts, etc., can be used to make a partial prepayment on your home loan. If used to pay off your housing loan, it can help you pay off the loan faster and help you save on interest as well. Nowadays, most banks don’t charge a fee on prepayment and preclosure, so it would be a wise choice to prepay a loan as it would benefit you monetarily and help provide you with a stress-free repayment process.
  • Use a EMI calculator – Many applications and websites offer EMI calculators. Using these calculators can help you estimate the financial outflow that has to be incurred by you on a monthly basis. This will help you gauge if you are capable of making EMI payments. If the payments are going to be financially stressful, it may be a good idea to not take up that particular loan. Use applications such as the BankBazaar Mobile App which have EMI calculators and is user-friendly.
  • Refinance your home loan – Refinancing your housing loan is an effective and popular method of paying off your mortgage. If another bank or financial institution is providing you with a lower interest rate for your existing loan, it is a wise choice to refinance your loan. However, one must keep in mind that some banks charge a fee of refinancing a home loan. One must calculate all the expenses before opting to refinance your home loan. After all, if these expenses overshadow the savings from the lowered interest rates, it may not be worth refinancing the mortgage. They can also be refinanced if you are looking for better customer service. Either way, refinancing a loan can help you get on course for a stress-free repayment.

Customers of a housing loan can request the bank to reduce interest rates after a while of repaying the loan. However, if the bank is not willing to reconsider the terms of the loan, you may choose to refinance it. Another factor to keep in mind is that you pay a larger sum of the interest when compared to the principal during the initial stages on the loan. After a while, you only pay a fraction of the interest and a lump sum of the principal. Since you have already paid off most of the interest at this point, it doesn’t make sense to refinance the loan now.

  • Reassess investments – Investing does reap its benefits. Nevertheless, if your ROI (Return on Investments) is lesser than the interest rate on your home loan, it makes more sense to withdraw your investment and prepay your home loan.

It is not wise to exhaust your investments though, as this is put in place to secure your finances in future. Make sure to hold some of the investments but if the ROI is not greater than the interest payable on your home loan, it may be wise to withdraw and invest a lesser amount elsewhere.


  • Choose a shorter tenure – A shorter home loan tenure means  a higher EMI, but also means that you will end up paying lesser interest. This is effective in reducing the burden on home loan repayment. And even though short home loan terms frequently attract higher interest rates, in essence, the total interest payable will be lesser when compared to a home loan with a longer tenure.
  • Renegotiate the loan – Because of the immense competition in the home loan market, banks are bound to reduce the interest rates on negotiation. A small reduction in the home loan causes a huge difference in the total interest paid, allowing you to save up on some money. Renegotiating on the terms of your home loan is a good start to making your repayment process stress-free.

Paying off a home loan requires long term commitment due to the nature of the loan, and can sometimes be burdensome. However, follow the steps mentioned in the article and create financial discipline to reduce the burden of repayment. Make use of the technology that has been amalgamated into finance, use applications like the BankBazaar app to compare & apply loans, calculate EMI, create a budget, etc. Doing so help you reduce the burden of repayment and help you save some money in the process as well. So, don’t be afraid to take up a home loan, just make sure to pay off the loan on a timely basis, and make repayments whenever you can.

Leave a Reply

Your email address will not be published. Required fields are marked *