How Can You Save Big On Home Loans?
3. Impact on tax savings
On taking a home loan, one could avail tax benefits which may get impacted by prepayment of principal. However, a careful analysis reveals that the savings in interest expenses is higher than tax savings, especially when the prepayment is done in the beginning of payment period. For self-occupied property there may not be any change in tax benefits since interest deduction is limited at 
1.5 lakh. For let-out-property the person may have to sacrifice on tax benefits but even then the savings on interest expenses will be better than tax benefits.
4. The process of prepayment should not continue
Most of the people believe that to enjoy maximum benefits one should prepay till the loan becomes zero. But since the interest is highest in the beginning, the bank receives the major amount of interest at the starting of loan tenure. Once a handsome amount of the loan is prepaid, one should not worry about prepayment of principal on the latter half of loan tenure as savings on interest will significantly come down.
Hence, partial prepayment of principal is a smart move to save money while paying for home loans.
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