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3 Smart Ways to Reduce your Home Loan Tenure and Save Lakhs of Home Loan Interest
By Anupama Deshpande | Sep 7, 2018

Everyone of us has a dream of owning our dream home. Now-a-days, it is possible to have your own home as there are various lenders for home loan available who are offering home loan at very low interest rate & with very flexible terms.

If you have availed Home Loan then you must be aware of the fact - the more time you spend on repaying the loan, the more interest you will have to pay. As a borrower, the customer is free to assess the details of home loan interest rates offered by various lenders and chose the best deal out of them.

After availing home loan by the lender chosen by you, you should always be concerned about the ways to reduce your interest rate burden. You can reduce your home loan tenure which is much better than reducing EMI when you want to reduce the interest payment on your home loan.


There are 3 ways to reduce your Home Loan Tenure which are:

(1) Increase in Home Loan EMI

You can increase your home loan EMI and start paying more EMI. In this way, the loan tenure will get reduced. With lesser tenure, you will be paying less interest on your home loan.

(2) Make Partial Prepayment of your Home Loan

Whenever you have additional funds, you can go for prepaying a part of your home loan. Remember that even if you are prepaying your home loan partially, you should not opt for reducing your home loan EMI.

(3) Don't Opt for Reduced EMIs even if Home Loan Interest Rate has fallen

If you have taken home loan linked with MCLR, and your home loan interest rate is reduced due to fall in MCLR, never go for reduction in EMI but keep on paying the existing EMI. This will save a huge amount of interest on home loan.

You can understand this by an example, suppose you have taken a home loan of Rs 50 lakhs at 11% rate of interest. The original tenure of loan was 20 years and you have been paying an EMI of Rs 51,610. Now your bank has cut rates to 10.75%. With this, your EMI will be reduced to Rs 50,671. But do not opt for this option.

Go for another option i.e. continuing with paying existing EMI i.e. Rs 51,610. If you can continue to pay the original EMI (i.e. Rs 51,610), then you can reduce the tenure of your loan by 1 year and you will save Rs 6.71 lakhs of home loan interest in this way.

About Anupama Deshpande
Anupama is a Co-Founder of CodeForBanks.com. She is an MBA (Finance) and Chartered Financial Analyst (CFA). She also carries a Fellowship degree in Life Insurance Sector and is a Master of Computer Application (MCA). She is an expert in Finance Field with an experience of over 18 years on different managerial positions in finance industry including Stock Market, Depository and Mutual Fund Sectors. Apart from that she has remained for few years in the field of marketing as well. Her suggestions and advice for investments have been very useful to many people.
Her vast interest & expertise in the field of finance have encouraged her to write the articles so that others can also get benefitted out of them. She never loses any opportunity to learn and be creative. She is a valuable asset for CodeForBanks.com & important resource to all those around her.

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