Prepayment of Home Loan – Reduce EMI or Tenure

Prepayment Home Reduce EMI

Prepaying a Home Loan may help you reduce the principal and also lessen the interest rates! If you have some surplus money at your disposal, you should prepay a Housing Loan and reduce the overall costs. You can also utilize a Home Loan prepayment calculator to know about the charges involved and other aspects.

However, some borrowers may want to prepay their Home Loans, but still, don’t know the Dos of it. Thus, let’s provide you some Dos or basics of a Housing Loan prepayment as you read on!

Home Loan Prepayment Dos to Help You Out!

Opt for a Home Loan Smartly

Yes, you may say that it applies to the initial phase of availing a Home Loan, you would require to put in a lot of research before deciding which one to go with! This is even more crucial when you have a plan to prepay the House Loan later. Before you do so, it will be good to consider all the offers by service providers before taking a final call. Also, it will be good to opt for a lender who would let you prepay without asking for a penalty.

Always Keep your Budget in Mind

You may find it a bit tedious; it’s always better to lessen the loan figure as compared to increasing the financial burden. Hence, always decide on a budget first, opt for a home accordingly and then only apply for a loan. If you don’t do that, you may be financially strained in the end, and that won’t suit you, right?

Pay Stable EMIs

If you want to ensure that a Home Loan prepayment works in your favour, it will be suggested to keep your EMI fixed and unchanged. When you are ready to prepay, you get two options to choose – you can either lessen the EMIs or reduce the loan tenor. In both these cases, your goal should be to have a steady EMI. Hence, always select an EMI amount that won’t affect your monthly budget and keep it as stable as possible. You can also calculate your loan EMI free with the help of an online Home Loan EMI calculator available at a lender’s website.

Prepaying the Loan Early is the Key

The major aim of making a Home Loan prepayment is to reduce the interest amount paid and keep off some financial burden. A majority of such loans are designed in such a way that the original EMIs go as the interest component. In other words, the earlier a borrower decides to prepay a loan, the more interest he/she will save. Thus, if you have plans to repay your Home Loans, it would be better to do it when your loan is still young.

Be Ready to Furnish all Relevant Documents

Once you have considered all elements of a Housing Loan prepayment, and all set to go ahead, ensure to carry or furnish all required documents. The basics should be KYC documents such as PAN Card, Aadhaar Card, Driving License and your cheque book. However, the final list of documents may differ from lender to lender, and you should also ask your lender to be dead sure about the documentation part.

The Bottom Line


These days, you can see most of the non-banking finance companies (NBFCs) offering zero foreclosure and prepayment charge if you prepay or foreclose a loan. Also, since you are also aware of the Dos of the House Loan prepayment, you should be able to do it convincingly!