Paying off a home loan is one of the biggest financial goals for many individuals. The good news? There are easy ways to get rid of home loan EMI before time, helping you save a substantial amount on interest and achieve financial freedom faster. Whether you’re a salaried employee, a self-employed professional, or a first-time homebuyer, smart planning can significantly reduce your loan burden.
In this guide, we break down actionable tips, expert advice, and real examples to help you repay your home loan EMIs early. So, if you’ve been wondering how to clear your loan faster without compromising your financial health, this article is for you.
Home Loan Tips
| Key Information | Details |
|---|---|
| Topic | Easy ways to get rid of home loan EMI before time |
| Best Methods | Prepayment, EMI hike, shorter tenure, balance transfer |
| Tax Benefit | Up to ₹1.5 lakh (Section 80C) and ₹2 lakh (Section 24b) |
| Top Advice | Increase EMI or make regular part-payments |
| Who Should Read | Homeowners, salaried professionals, new buyers |
Paying off your home loan early is not just a dream — it’s a very real possibility with the right strategies. By planning your finances smartly, increasing EMIs, making use of bonuses, and considering balance transfers, you can become debt-free faster. The sooner you finish your EMIs, the quicker you can focus on building wealth and enjoying your financial freedom.
Why Repaying Home Loan Early Makes Sense
Save Lakhs in Interest
The longer you take to repay your home loan, the more interest you pay. For instance, a ₹50 lakh loan at 8.5% interest for 20 years would lead to total interest outgo of nearly ₹51.84 lakh. Prepaying even a small portion early can drastically reduce this amount.
Achieve Financial Freedom
When you close your home loan ahead of schedule, your monthly cash flow increases, allowing you to invest or spend more freely. This is especially important if you’re planning for retirement, children’s education, or buying another property.
see also: Know How Much Return You Will Get on an Investment of ₹ 5,00,000?
1. Start with Prepayment When You Can
Prepayment means paying extra money towards your principal amount apart from your regular EMI. This helps reduce the overall interest and tenure.
Example:
Suppose your EMI is ₹43,000/month. If you get a yearly bonus of ₹50,000 and put it towards your loan, you can shave off years from your repayment term.
Tip: Most banks allow part-prepayments without any penalty for floating rate home loans, as per RBI guidelines.
2. Increase Your EMI with Every Salary Hike
As your income increases, so should your EMI.
Why This Works:
By increasing your EMI by just 5-10% every year, you repay the principal faster, reducing the interest cost.
Example: A ₹50 lakh loan with a 20-year tenure can be closed in 14 years if you increase your EMI by 10% annually.
3. Choose a Shorter Tenure When Possible
While shorter tenure loans have higher EMIs, they come with lower total interest.
Real Insight:
If you can afford a ₹60,000 EMI instead of ₹43,000, choosing a 15-year tenure instead of 20 can help you save over ₹16 lakh in interest.
Note: Use home loan calculators like HDFC’s EMI Calculator to plan better.
4. Opt for Home Loan Balance Transfer
If another bank is offering a lower interest rate, consider a balance transfer. This can significantly reduce your EMI and interest burden.
What to Watch:
Make sure to account for processing fees and other charges before switching.
Pro Tip: Negotiate with your current lender before transferring — they may match the lower rate.
5. Make a Higher Down Payment
The higher your down payment, the lower your loan amount and EMIs.
Example:
For a property worth ₹70 lakh, paying ₹30 lakh upfront means you borrow only ₹40 lakh — saving huge interest over time.
Minimum Tip: Try to pay at least 25-30% as down payment.
6. Use Tax Benefits to Reinvest in Your Loan
Under Section 80C, you can claim deductions up to ₹1.5 lakh on the principal. Section 24(b) allows ₹2 lakh deduction on interest.
Smart Move:
Use the tax refunds to make prepayments or increase EMI.
Official Link: Income Tax Benefits on Home Loan
7. Use Windfall Gains Wisely
Bonuses, maturity of fixed deposits, sale of property, or gifts can be used to make lump-sum payments.
Why This Works:
These one-time payments directly hit the principal and reduce EMI pressure.
8. Avoid Loan Top-Ups Unless Necessary
Many banks offer top-up loans on your home loan, but this increases your repayment burden.
Tip: Only take top-ups for essential needs like home renovation or medical emergencies.
see also: How Much Interest Will You Get in Post Office Saving Account?
Home Loan FAQs
Q1. Is there a penalty on home loan prepayment?
As per RBI rules, there is no penalty on prepayment of floating rate home loans.
Q2. How much can I save by prepaying my home loan?
Depending on the amount and timing, you can save lakhs in interest. Even small amounts make a big difference when paid early.
Q3. Is a balance transfer a good idea?
Yes, if the new lender offers a significantly lower rate. But check for hidden costs.
Q4. Can I increase EMI after a few years?
Yes, you can request your bank to revise EMI as your income increases.
Q5. What happens if I miss a few EMIs?
It affects your credit score and invites penalties. Always inform your lender if facing difficulty.
