People often face situations where they require immediate funds. We don’t have to empty our savings accounts or sell valuable assets in such circumstances. A mortgage loan can be an option for people who are in immediate need of funds. You cannot apply for a housing loan when you need urgent assistance. A housing loan can only be used to purchase a house/plot. On the other hand, a mortgage loan will provide you with funds that can be used for anything, from medical expenses to business needs. However, one must use an existing property as collateral to accumulate funding via a mortgage loan.
Borrowers often find ways to repay mortgage loans quickly. It will make them debt-free sooner, and they can apply for higher loans. Not to forget, closing a mortgage loan will free the property used as collateral. Individuals cannot sell the property against which a mortgage loan has been taken. Mortgage loan interest rates are also a big headache for many borrowers. Since there are numerous pros to repaying a mortgage loan quickly, let us understand the ways to do so.
Make payments more than the EMI amount when possible
A mortgage loan will be repaid in pocket-friendly installments. The mortgage loan EMI amount will be known to the borrower beforehand. Sometimes, a borrower may have extra money left after paying a mortgage loan EMI. For example, someone might get a monthly bonus that adds to their monthly income. In such a case, one must try paying more than the EMI amount.
Every mortgage loan EMI consists of an interest charge. One can use an online mortgage loan calculator to know the interest charges associated with each EMI. When you apply for a mortgage loan, you will be informed about the applicable interest rate. The interest rate will be applied to each installment’s remaining mortgage loan amount. When you pay a little extra every month, the amount is deducted from the principal amount of the mortgage loan. Paying extra will decrease the tenure of your mortgage loan and will help you save a good amount that you would have paid as interest.
Choose a higher monthly EMI amount
Selecting a higher EMI amount is the best way to repay a mortgage loan faster. When the EMI amount is high, the principal mortgage loan amount will be paid quickly. Usually, mortgage loans with shorter tenures have larger EMIs. Borrowers choose EMI amounts based on their monthly earnings. For example, if someone earns INR 20,000 a month, they cannot pay an EMI of INR 25,000. If you can afford it, choose a higher EMI amount. If you cannot afford a higher EMI amount, choose a longer repayment tenure with affordable EMIs.
Do not miss out on mortgage loan EMIs
Borrowers must avoid missing out on mortgage loan EMIs. When you miss out on EMIs, you attract additional charges and penalties. It will take you longer to become debt-free from a mortgage loan. Not to forget, mortgage loan interest rates are also applied. Another disadvantage of missing out on mortgage loan EMIs is poor credit history. Whenever you miss an EMI, your credit score will plummet. It might make you ineligible for future mortgage loans. Lenders do not prefer giving loans to individuals known to miss out on EMIs.
Search for mortgage loan prepayment options
Some lenders allow you to prepay a part of the mortgage loan. By prepaying a part of the mortgage loan, you can reduce the principal amount for the loan. Usually, lenders allow prepayment when taking a mortgage loan. So, if you have a lumpsum amount, give it to the lender and decrease the overall interest charges. You can use an online mortgage loan calculator to understand how much money you will save from prepayment.
Repaying a mortgage loan quickly will make you debt-free in a shorter period of time. Also, you can become eligible for higher mortgage loans by closing the existing one. Fullerton India allows customers to prepay mortgage loans and become debt-free and learn more about ways to repay a mortgage loan faster!