Any loan is a liability. Until you repay the loan principal and interest in full, you can never live in peace. And, the pressure is even more when you have mortgaged your property to avail the loan. But repaying principal and interest is not that difficult if you plan properly. This article contains the steps you can take to easily pay your mortgage loan dues and achieve the coveted debt-free status.
Top Ways To Pay Mortgage Loan Easily
Paying mortgage loan principal and interest increases your eligibility to apply for new loans. The following steps can help you to repay the loan easily.
Refinance the Mortgage Loan
If your loan is at least one year old and you have never skipped EMI payments, you may opt for a mortgage loan refinance. You can use a mortgage loan EMI calculator to calculate the net savings and apply for a refinance. Refinancing often allows a borrower to bring down their loan EMIs and increase mortgage loan eligibility. However, before availing a mortgage loan refinance, check whether the money you save is enough to take care of the prepayment and loan processing charges.
Pay Something Extra Each Quarter
If you are on loan with a term of twenty years and decide to pay an amount equivalent to one EMI extra every quarter, you can close your loan in less than fifteen years. The more you pay, the faster you can close the account. However, when you prepay the mortgage loan to increase your eligibility, mention that you are making the extra payment for principal repayment. As your principal reduces, so will the interest. But, this mode can only work well when the lender does not impose any prepayment penalty. Hence, before prepaying, it is wise to check the costs associated with prepayment.
Round-Up Mortgage Loan EMI
Rounding up is an easy way to clear loan dues earlier and increase mortgage loan eligibility. Rounding up is a simple process where you round up the EMI shown by the mortgage loan EMI calculator to the nearest 1000. For example, if the mortgage loan calculator shows the EMI as INR 1,863, try to pay INR 1,900 every month. The little extra amount you pay now will help you save the loan cost and repay the loan earlier.
Use Windfall Gains to Repay Mortgage Loan
At times, you may get a windfall gain, such as a holiday bonus, card rewards, tax refund, etc. If you want to increase mortgage loan eligibility, you can use the monetary gain to pay a lump sum as loan EMI. By using the windfall gain, you will not strain your savings account and yet pay the loan dues earlier.
Do Not Exceed Your Limits
Although your mortgage loan eligibility might be high, it should not trigger you to avail a high-value loan. As a golden rule, you should never allow the EMIs to exceed 40% of your net monthly income. If your EMIs are within limit, you can always pay extra without hurting your finances.
Paying your mortgage loan early can increase the eligibility and make you relaxed. Keep the aforementioned tips in mind to get rid of debt faster.