What is pre-payment?
A home loan pre-payment is when you repay your loan in case of unexpected gains or a surplus of money before the agreed-upon tenure for which you took your loan.
Top 6 Things To Know About Home Loan Pre-Payment
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Who Should Consider It?
A person should weigh the pros and cons of pre-payment such as if the surplus can generate a return it is better than paying the loan early.
Surplus Money
Tax Implications
The old tax regime provides tax deductions in home loan repayment while the new regime does not. Choose according to your tax regime.
Tax Deductions
Lower EMI
Pre-payment of a loan can help you lower your EMI, resulting in ease of burden caused by the monthly financial obligation.
EMI
Early Loan Closure
You can choose to alter the loan closure tenure if you pre-pay, allowing you to be debt-free early, which is the case for most retirees.
Early Closure
Saving on Interest
As the interest is calculated on the principal amount borrowed, a reduction in the principal amount can help you save drastically on interest
Savings on Interest
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