Busting Home Loan Myths

Busting Home Loan Myths - Tips to Close that Home Loan soon

Are you thinking of closing your home loan early? It is a wise decision given the amount of money you are spending every month on EMIs. It

also means that you can completely own your dream home and save on interest costs. Moreover, with banks scrapping the pre-payment

penalty, it has become easier than before. However, to do that you have to plan your finances accordingly. Here are certain tips that can

help you close the home loan soon.

Plan how much you want to repay

It’s always better to plan how much you wish to repay each year. So, at the beginning of the year, sit down and draft a month-wise plan and

stick to it.

Don’t put all your available resources to foreclose a loan

One common mistake most homeowners make to foreclose the home loan is that they put in all resources to repay it, without saving for a

rainy day. If you use all your money to pay off the loan, you will be left with nothing to handle unexpected contingencies.

Build an emergency fundIt is always better to create a separate fund to deal with emergencies. For instance, you have resigned from your job and looking for a new one. You need a fund to keep your family solvent during this period. Experts advice that you should have at least 6-8 months' worth of

salary saved up.

Look closely at your spending habits

The best way to save is to track your monthly expenditure and see where your money is going. You will be surprised at the unnecessary purchases you are making. Analyse your needs, do your math, and

curtail overspending.

Pay off other loansBefore saving up to foreclose your home loan, pay off all other loans

like a personal loan or car loan. By doing so, you will have more money at your hand to repay your home loan.

Make smart investments – mutual funds

Most people believe that the best way to save up to repay a home loan is to put money in saving accounts or fixed deposits. If you want higher returns, invest in a mutual fund with good performance. The taxation

on such funds is lower than that on fixed deposits.

Use your year-end bonus wiselyIt’s time for your year-end bonus, and you are thinking of using it to go on a trip or to buy a new car. Instead add it to an emergency fund, or

better still, use it to repay the home loan.

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