A Comprehensive Guide to Reducing Home Loan Tenure
Home Loan tenure is the time taken by the borrower to repay the entire loan amount, including the principal and the accumulated interest. A borrower is faced with two choices while trying to reduce their financial burden; either to try and increase the EMI amount or reduce the Home Loan tenure. While both methods have their own perks and drawbacks, we’ll specifically look at how to manage Home Loan tenure.
An important question to ask yourself is can you change your Home Loan tenure? The answer to this is yes. Mentioned below are the ways you can go about switching your Home Loan tenure and how it impacts your repayment process.
Understanding the Essence
A loan tenure is the period from the disbursement of the loan to the time the last EMI fulfilled and the loan is considered repaid. The more time you spend on repaying the debt, the more interest you will have to pay. So, as a borrower your priority should be bringing down this tenure period so that the interest charged remains on the down low.
When compared with increasing your EMI, reducing the tenure is preferable since any change in the EMI would entail additional paperwork on your part.
How to Reduce Home Loan Tenure
The procedure to reduce Home Loan tenure is a simple one. Simply reach out to your bank and inform them of your intention to reduce the loan tenure. Banks are usually willing to bring the tenure down because it directly impacts the risk associated with the loan transaction and reduces it, much to the bank’s advantage.
The bank will then update your details in their records and you can start making the necessary changes in your payment process to ensure that you meet the new repayment deadline.
Meeting the New Deadline
Once your application for reducing the tenure has been approved, you need to adjust your repayment policy accordingly. Here are some Home Loan tenure tips to help you ease the process.
One of the most effective ways to ensure that you pay back the loaned amount before the expiration of the new tenure is by making large pre-payments whenever you have access to cash. This not only helps you meet the payment deadline, but also ensures that you pay a reduced interest amount.
Once you know that you have to pay the Home Loan back early, start managing your finances better. Make a concentrated effort to save more money each month so that you can finish the repayment process in time.
Figure Out the Math
Loan payments can involve a lot of calculations and detailed analysis of how each move you make will affect your financial standing. Make all the necessary estimates to figure what would be more profitable for you; increasing the Home Loan EMI or lowering the loan tenure.
There are a lot of factors to take in before you apply for a Home Loan or make any changes in your existing debt repayment strategy. A bank that allows you the freedom to make those changes is quite essential in the grand scheme of things. When you opt for the Home Loan services at Bajaj Finserv, they make the entire loan acquisition process a whole lot easier.