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Banking and Finance

Tips for Shortening the Term of an Existing Home Loan

It should come as no surprise that every homeowner who takes out a mortgage wants to pay it off promptly and transfer ownership of the house. It should be emphasized that a home loan is the largest debt a person ever incurs, and that a single error. Such as choosing the incorrect home loans tenure or a higher EMI amount—can make matters worse.

How to Choose the Correct Home Loan Tenure?

The affordability of the EMI completely determines the best home loan term. Which essentially implies the amount you may set aside from your salary for EMI payments after taking all necessary costs into account. The majority of the “essential expenses” are made up of outstanding debt, including credit card debt.

There are other guidelines that will help you choose the appropriate house loan tenure as well. The 50-30-20 rule of thumb, for instance, recommends that 20% of your income be set aside for savings and investments and the remaining 50% of your income be utilized to pay for household bills.

Using the following rule of thumb as a guide. You can easily calculate the EMI amount and explore other repayment options using the home loan EMI calculator.

Tips for Reducing the Term of Your Home Loan

Increasing the EMI amount is one of the best strategies to shorten the length of your home loan. But doing so without taking your financial situation into account can be risky. The following advice can help you shorten your current house loan’s term without significantly affecting your finances.

Step-up EMIs:

With the step-up EMI function, you can increase your monthly payment at predetermined intervals for the duration of your loan. For instance, you could raise the EMI payment each year in accordance with your rising salary level. You must submit an application to the lender asking for a modification in the EMI amount in order to increase the EMI amount. Once approved, your bank account will begin to be debited for the new adjusted EMI amount. Part payments typically cover this, and most lenders accept this method. Especially for home borrowers who make a living from their jobs.

Part Prepayment:

In addition to making regular EMI payments toward your mortgage. You can shut the loan account before the term of the loan is over by partially prepaying the outstanding loan balance. Part prepayment is effective when you have a lump sum of idle funds that is not equal to the balance of the loan. It helps to lower the cost of interest and shorten the loan term because you are paying down the main balance due.

Balance Transfer your Home Loan: 

Balance Transferring a mortgage refers to paying off an existing loan balance by taking up a new mortgage from a different lender with more enticing terms, such as a reduced interest rate. For the EMI you were previously paying, the loan tenure immediately shortens with lower interest rates. However, before submitting an application for a refinancing of your mortgage. You should take into account all the charges related to the balance transfer of the loan.

Restructuring your Home Loan:

Depending on the circumstances, some lenders can let you shorten the term of your mortgage. In order to lower the EMI load. Don’t be afraid to discuss the loan terms with your lender if such a facility is offered. To get a better deal on house loan repayments, keep up with the government and RBI’s policy changes.


Your interest expense and home ownership costs are both greatly decreased by shortening the term of your mortgage. However, you should first consider the impact on your finances, credit score. And whether you can regularly pay the increased EMI amount until the loan term is up before making any changes to your EMI payment arrangement.

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