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How to pay off your home loan faster

March 18, 2009
Most people who have taken a home loan would love nothing more than not to have to put that EMI (equated monthly installment) in their bank every month.

Trying to pay off your home loan ahead of schedule is not something to be taken lightly. You must make sure that you are financially secure, with no other significant debt, and have enough money in reserve for emergencies after you repay your home loan.

While a lot of people would want to repay their home loan in double quick time, there will always be those who will discourage you from doing so.

For instance, some people will argue that investing the money rather than repaying loan could earn you enough money to offset the benefit of paying off the loans.

Or maybe you would just like to enjoy your money when you have it. By allotting less of your income towards your loan, you have more money available for a vacation or another luxury, goes another argument. You can also use the money towards home improvement to make your home more comfortable and more valuable when you are ready to sell it, is yet another. Whatever may be the case, your aim must be financial security.

You must remember that in your haste to get rid of your monthly EMI burden, you cannot afford to mortgage your financial future. Make sure you will be able to finance your children's education and your own retirement even as you make an effort to retire your home loan.

Then there's also the matter of tax benefits that home loan payments bring. Be sure to factor increased tax liability into your financial projections before making your decision.

There are a few ways to accomplish this if you want to be in a debt-free financial position by paying off your loans quickly without sacrificing other aspects of your life.

Naturally, you will have to consult your lender to see what you can and cannot do. Here are a few of the options available.

Text: Bhupen Achari, Easyfinance.in, a Web site that provides information on home loans, car loans, personal loans, mortgage loans, education loans, business loans, term loans & project loans in India.

Illustrations: Dominic Xavier

Also see: 10 financial decisions you should not make now
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