How Can You Save Big On Home Loans?

By SiliconIndia   |   Thursday, August 29, 2013   |    1 Comments
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Bangalore: A beautiful home at the centre of the city equipped with all the necessary amenities is a dream of every individual. To fulfill this dream, one could easily get a home loan and acquire the house without saving large sum of money. However, with the recent fall in rupee the home loan interest rates have gone up. People who have already applied or are intending to apply for loans with floating interest rates are going to suffer the most, reports Rediff.com.

To relieve people from the burden of high interest, partial prepayment of home loans can be an effective way to save money and enjoy various benefits.

What is partial prepayment of home loan?

Longer the tenure of the loan more will be the money spent in home loan interest. An effective way of bringing down the tenure of loan is partial prepayment in which one should pay additional principal amount along with the usual EMI. Partial prepayment is feasible when the amount that is accumulated to prepay loan is saved after taking care of short-term liquidity needs. The person paying the loan should be comfortable with his current EMI and should not have any other high cost loans. The method of prepayment helps to reduce the outstanding principal amount and therefore the tenure comes down while EMI remains the same. Most banks don’t charge any penalty for prepayment but the amount that can be prepaid should be discussed with the respective banks.

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