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How to free yourself from home loan EMIs? Here are some tips
This story is from January 14, 2020

How to free yourself from home loan EMIs? Here are some tips

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NEW DELHI: In today's time, owning a home is a desired dream which is spoilt by a long EMI burden. And, this burden leaves a sizeable dent in one's monthly income.
To avoid the same, one is required to plan smartly keeping in mind the EMI (Equated Monthly Installment), rate of interest and loan tenure as these play a significant role in the home loan repayment.
Here, we have listed down some tips that would help in reducing your EMI burden:
Increase in the EMI payments: You can pay off your loan much faster if you increase your EMI payments. Usually, tenure of the home loan is a minimum of 5 years and if you are a working individual then your salary would increase during the tenure of the loan. So, that increased salary can be used for repayment of the loan by increasing the usual EMI payment as this would close the loan early.
Make payments in advance: If you have received some additional income in terms of bonus, increment or any other source then you can route it towards prepayment of your loan. If you choose to make an advance payment of the loan with a good amount then you can either pay the same EMI by reducing the loan tenure or go for the same loan tenure but with reduced EMI.
Therefore, it is suggested that one must opt to pay a larger EMI as this will help in closing the loan faster and reduce the total interest to be paid.
Repay your loan ahead of time: One must try to repay the loan before time if there is enough money collected by an individual. So if you repay the loan amount ahead of time it would help you save on the interest amount that you need to pay on the loan.
So, if you maintain financial discipline then you can easily free yourself from EMIs. Also, try to utilize your extra income in the best possible way.
Here are some of the most common questions asked about home loan EMIs:
  1. What is home loan EMI?
    It is a monthly repayment that a home loan borrower must make to repay the home loan within the stipulated time period.
  2. What are the factors that affect home loan EMI?
    • Principal (loan amount)
    • Rate of interest
    • Tenure
  3. What is the formula to calculate EMI on a home loan?
    EMI = [P x R x (1+R)^N]/[(1+R)^N-1], where
    P is the loan amount
    R is the interest rate per month
    N is the number of monthly installments
  4. Can I pay my home loan early?
    Yes, you can make a prepayment of your home loan before the tenure. Also, this will help you save a lot of money.
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