Home loans are a double-edged sword. While they help you own an asset, the interest cost over 20-30 years is massive. However, with a few mathematical tweaks, you can close your loan years early.
Strategy 1: The One Extra EMI Rule
Paying just one extra EMI every year can reduce a 20-year loan tenure by approximately 4-5 years. This is because the entire extra payment goes directly towards reducing the principal amount.
Strategy 2: The 5% Annual Increment
As your salary grows, your EMI should too. Increasing your EMI by just 5% every year can finish a 20-year loan in roughly 12 years. This is one of the most powerful ways to become debt-free.
Calculate your savings
Use our EMI calculator to see how much interest you pay over the tenure and plan your prepayments.
Open EMI CalculatorStrategy 3: Lump Sum Prepayments
Whenever you receive a bonus or a tax refund, use it to make a partial prepayment. Even a small prepayment in the early years of the loan (Years 1-5) has a much larger impact than in the later years due to the way amortization works.