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4 Methods to Repay Your Loan Against Property Quickly

Published On Dec/14/2023

Taking a loan against your property can provide you with the necessary funds for various financial needs. However, it is essential to manage your repayment effectively to avoid excessive interest payments and ensure financial stability.

In this article, we will discuss four proven methods to help you repay your loan against property quickly. By implementing these strategies, you can save money, reduce your debt burden, and achieve financial freedom sooner.

1. Create a Budget and Stick to It

The first step towards repaying your loan against property quickly is to create a realistic budget. Assess your income, expenses, and existing debt obligations to determine how much you can allocate towards loan repayment. Consider cutting unnecessary expenses and redirecting those funds towards your loan. By adhering to a well-planned budget, you can prioritize loan repayment and reduce your overall debt burden.

Alternatively, you can make occasional lump-sum payments towards the principal amount of your loan. This can be done using surplus funds from bonuses, tax refunds, or any other windfall gains. Even small additional payments can make a significant difference in the long run, reducing the interest rates on loan against property and shortening the loan tenure.

2. Consider Loan Refinancing

Loan refinancing is another option to explore if you want to repay your loan against property quickly. Refinancing involves transferring your existing loan to a new lender who offers better terms and conditions. By refinancing, you may be able to negotiate a lower interest rate, reduce the loan tenure, or both. This can lead to substantial savings in interest payments and help you repay the loan faster.

However, before refinancing, carefully compare the costs and benefits associated with the new loan offer. Consider factors such as processing fees, prepayment charges, and the impact on your credit score.

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3. Increase Your EMI Payments

One effective strategy to repay your loan against property quickly is to increase your Equated Monthly Instalment (EMI) payments. Contact your lender and discuss the possibility of increasing your monthly instalments. By paying a higher EMI, you can significantly reduce the loan tenure and the overall interest burden.

You can use a loan EMI calculator to determine the new EMI amount based on your desired repayment tenure.

4. Make 20% to 30% Down Payment

Opting for a 20% or 30% down payment when obtaining a loan against property can have significant benefits. By contributing a larger sum upfront, you decrease the principal loan amount and consequently reduce your debt burden. This results in lower monthly EMIs and a potentially shorter loan tenure.

Why Should You Opt for Early Loan Repayment?

Opting for early repayment of a mortgage loan can provide several advantages. Here are some reasons why it can be beneficial:

1. Reduced Financial Risk : By eliminating or reducing your loan against property early, you lower your financial risk. You are less vulnerable to economic downturns, interest rate hikes, or unexpected financial hardships that may affect your ability to make payments.

2. Improved Creditworthiness : Early repayment of a mortgage loan demonstrates financial responsibility and can improve your creditworthiness. It shows lenders that you are capable of managing a significant debt and can positively impact your credit score. This can be advantageous when applying for other loans or lines of credit in the future.

3. Peace of Mind : Being mortgage-free sooner provides a sense of accomplishment and peace of mind. You won't have to worry about meeting mortgage obligations, and you can enjoy the security and stability of owning your property outright.

4. Debt Freedom: Being mortgage-free earlier offers a sense of financial freedom and security. It eliminates a significant financial obligation, giving you more flexibility with your finances. You'll have extra funds available for savings, investments, or other goals, and you won't have to allocate a portion of your income toward monthly mortgage payments.

Key Points to Remember While Repaying Loan Against Property

When repaying a loan against property, here are some key points to remember:

  • If you face difficulties in repaying the loan, contact your lender to discuss possible solutions. They may offer temporary relief options, such as loan restructuring or alternate repayment plans, based on your situation.

  • Make your loan repayments on time to avoid late fees, penalties, and a negative impact on your credit score. Set up reminders or automatic payments to stay organized and avoid missed payments.
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  • Continuously educate yourself about personal finance and loan management. Stay updated on financial trends, interest rate changes, and loan repayment strategies. This knowledge will empower you to make informed decisions and optimize your loan repayment process.

  • Keep copies of all loan-related documents, including the loan agreement, repayment statements, and correspondence with the lender. These documents serve as evidence of your loan repayment and can be useful for future reference or in case of any disputes.

  • Evaluate the loan term and assess whether it aligns with your financial goals. Shorter loan terms typically result in higher EMIs but help you save on interest payments in the long run. Longer loan terms may offer lower monthly payments but result in higher overall interest costs.

While early repayment of loan against property offers various benefits, it's essential to consider your overall financial situation, including factors like savings, investment opportunities, and other high-interest debts. Assess your priorities to determine if early repayment aligns with your long-term financial goals.

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