Can we reduce the tenure of home loan?

Home loans are the great option to buy a house without paying the entire amount in one go. But just like every other thing home loans also have a flip side . I am talking about paying EMIs every month along with the rate of interest. We can say paying EMIs is better than paying rent but these EMI also make an impact on the financial savings. So it is advisable to reduce the tenure of your home loan. And you know what “

can we reduce the tenure of home loan” is the most common question to a banker from a home loan borrower.

• Prepayment 

Pay some extra amount while paying the monthly EMI so that you can repay the loan soon. If you earned high profit in your business, make the prepayment of the loan this way you can reduce the tenure of your loan and hence soon you will be free from home loan liability. However, in some cases bank can ask for the proof of source of income and may ask you to submit the income proof documents.

• Loan transfer to another bank 

your cash flow has increased or you have reduced your expenses to make the loan EMI payment and you have already paid, suppose 60% of the loan amount within a few years in that case you can go for loan transfer.

Let us understand with an example: suppose you have availed the home loan of 70 lakh and repayment tenure is 15 years. But using the pre repayment method you have already 50 Lakh rupee within 5 years. Then in that case you should go for a bank loan transfer to save your money.

• For the bank transfer you need to take approval from the bank you want to transfer your loan (Bank 2).

• You need to inform Bank 1 that you are going for a balance transfer on a home loan with another bank. 

• Bank 1 will transfer your relevant document to Bank 2.

• Once the process is complete you can set the date of repayment with the bank 2 and this time go your short tenure with big EMI installments.

This is how we can reduce the tenure of the home loan. Hope when next time someone asks you “

can we reduce the tenure of home loan”, you have a complete smart guide to share.