Prepaying the loan we have taken can be little tricky and it is mainly seen when we are not aware of all the formalities penalties and extra charges involved in the process but prepayment of loan is helpful to us and it is beneficial to us as they reduce the rate of interest and reduces the burden and it also reduces the overall cost of the property that we have taken loan but when we get bonus or promotion first thing comes to our mind is to repay the home loan but first :
we have to know the formalities of repaying loan and we have to consider little things before repaying the loan we must consider.
- How many years old is my home loan?
- What is the rate of interest of loan?
- It will be difficult to manage EMI’S or not?
- What is the return I will get if I put good investment?
- how much amount of tax saving ?
Budget generally depends on the requirement of amount to us it depends whether we buy a apartment or independent house because the depending on the loan amount the charges changes if we want to build a house from scrap then the interest of our loan increases.
we have to choose right deal by choosing a location according to our budget but it is slightly tedious always try to reduce the loan amount because it reduces the financial burden we have to decide budget and choose home according to it and apply for loan.
Choosing Of Loan
Before choosing the plan of loan we have to make necessary research deciding which one to go with especially when we are ready to repayment of loan at some stage it is mandatory to us to check all the options before taking a final call on loan and we have to choose the best loan scheme that is suitable to us and prepay without charging.
To have advantage in the prepaying of loan in some stage we should not change the EMI of the loan when we decide to prepay we have to choose two options i.e., we could reduce the EMI amount or we can reduce the period of loan in both the case only common thing is to keep EMI’S unchanged.
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We have to pay the amount of loan as early as possible because the main aim is to reduce the amount of interest by loan prepayment and it eventually lift some of the financial burden to us these EMI’S are designed in such a way that the initial EMI’S go mostly as the interest component as the prepayment.
Interest Rate Are Proportional To Each Other ?
And interest are proportional to each other if more earlier we pay the more interest we save so we have to pay the loan in the initial stages to reduce the interest of the loan we have to carry all the relevant documents along with us for the loan once we are ready in every aspect to take the loan and prepaying the loan we have to carry all the relevant documents and government issued proofs.
And we have to take check book along with the relevant documents apart from prepaying the loan we simply has to pay the interest of the loan from the month on-wards which the principal is being prepaid.
If this was the case, then you need to start making your PF double which will make you enough confidence, in case if your have no PF account do read out the guide for the process of uan activation. we have to collect all the cheques after prepaying the loan because if we do not collect any mischievous things or scam may happen to prevent this type of issues we have to collect al the unused cheques.
Calculate The Benefits
We have to calculate all the benefits before prepaying the loan because it is the best alternate in every way therefore before taking some strange decisions .
we have to calculate the benefits first we have to over check the home loan interest and we have to start prepaying it generally in the context of banks home loan can offer with greater tax benefits with good redeem in principal and the interest amount.
we should not prepay the entire loan instead of doing this we have to pay the partial loan amount because interest is being less in the home loan the amount.
we prepay for loan must be invested in financial instruments for some good and decent returns we have to get an acknowledge after prepaying the loan it is mandatory for our proof that is only evidence that we have prepayed the loan and we have remember after we prepay the loan we have to sign the necessary documents and stamped by the officer of home loan department.
Hope it will helps.