Many borrowers have always wondered whether they should or should not repay their home loans early. Many home loan borrowers do not want to incur any debt burden on their head, so they focus on repaying the loan ahead of time. The following points should be considered before making a final decision in this regard

Availability of Money:

Before making a lump sum repayment of a home loan, you should estimate how much you will need in the near future and what financial obligations you have. This is because a large amount of money is required to repay a lump sum home loan. Even with this repayment, you may feel financially secure. And after repaying a home loan with a relatively low-interest rate, it may be time for you to take out a loan at a higher interest rate to meet other financial needs.

Keep Investing your EMI amount:

After a lump sum repayment of a home loan, you should plan to invest the same amount as the loan installment you are paying so far, otherwise, such amount should be spent on labor and other benefits.

Interest Rates on Home Loans:

If the interest rate on a home loan is relatively low, it is better to pay the loan regularly than to make a lump sum repayment. Similarly, if you have no plans for your investment in the near future, it is advisable to pay regular installments.

For example: If the amount of income you have left in the savings account after full repayment of the home loan is not appropriate. Therefore, the lump sum repayment period of a home loan should be thorough planning of future investments.

Income Tax Deduction:

Both home loan installments and interest are exempt from income tax. Therefore, individuals coming under the ambit of income tax should consider these issues before making a lump sum repayment of a home loan. The final decision should be made by comparing the income tax relief for the home loan children and the interest savings due to the lump sum repayment of the loan. Also, plan what you will do to save on income tax after repaying your home loan.

For example: As per the Income Tax Clause 80, the concession for interest on home loan will not be available next year, so other options should be considered.

Bank Fees:

The calculation of what charges the bank charges for a lump sum repayment of a home loan and how much financial burden it will incur on you should also be calculated before making a final decision.

The Balance of the Loan:

The amount of interest is very large in the initial period when repaying a home loan. In the latter case, the interest rate is relatively low. So it is important to keep in mind that your home loan is not worth the savings. Many borrowers have the mentality to assume that any debt is a big burden on their heads. However, with proper planning, it is beneficial to have a small amount of debt in your finances. Therefore, it is advisable to consider all the issues rose before making a lump sum repayment of a home loan