Mortgage Loan

Home loan repayment tips 20 year Loan Paid in 10 year's How





#theartofwealthbuilding
Want to prepay your home loan? Here is how you can do it
1 EMI SHOULD BE AFFORDABLE A smart borrower will never bite off more than he can chew. The loan EMI should not push you into a corner. Your car EMI should not exceed 15% of your net monthly income while personal loan EMIs should not cross 10%. The monthly outgo towards all loans should not be more than 50% of your net income. The loan-to-income ratio should be within acceptable limits. If it is not, you will be forced to put other critical financial goals, like saving for retirement or your child’s education, on the backburner. Retirement savings become the first casualty in such circumstances. Accuracy is critical when you compute your repayment capacity. Don’t take into account future income. Base your calculations on what you are earning now. Times are bad, and the 10% increment you may have based your projections on could actually be only 6% or even a flat 0%, if your industry goes into a tailspin. Missing an EMI or delaying payment can seriously dent your credit profile and prevent you from taking loans in the future for other goals. Experts say that if the borrower can’t repay, he should contact the lender before the EMI cheque bounces. One way to make the EMI affordable is by extending the tenure.
2. KEEP TENURE SHORT AND SWEET You must have heard about how keeping money invested for the long term reap the power of compounding. Well, in loans it works just the other way. The longer the tenure, the bigger is the interest burden on the borrower. If you take a loan at 9.75% for 10 years, the interest outgo will be 57% of the principal amount. This figure jumps to 91% if the tenure is 15 years and shoots up to 128% for a 20-year loan. In 25 years, the interest outgo is 167% of the principal. Borrowers are tempted to go for long-term loans because the EMI is lower and they enjoy tax breaks on the loan. But this is a misconceived strategy because they end up paying huge interest on the loan. Though tax benefits bring down the effective cost of the loan, they are still incurring an expense. Unless the money can earn more than the effective cost of borrowing, it should be used to repay the outstanding sum. In some cases, it may be necessary to take a long-term loan. Young people with low incomes may not be able to afford a short tenure. For them, the best option is to repay the loan as fast as possible by increasing the EMI. EMIs should be increased every year in line with the increase in income. This can dramatically reduce the loan tenure. A 25-year loan can be finished off in 10 years if the EMI is increased by 10% every year. Even one extra EMI every year reduces the tenure by nearly six years. Now, that’s a good way of utilizing the annual bonus or tax refund.
3. DON’T IGNORE OTHER GOALS For most Indians, their children’s education and marriage are critical financial goals. A parent will do anything to give his children the best. Through the education of the child is important, it should not jeopardize your own future. Don’t dip into your retirement corpus to fund your child’s education. Education loans are easily available and bright students also get scholarships. But nobody is going to give you a loan for your retirement needs. Taking an education loan will not only keep your retirement kitty safe but also inculcate a sense of fiscal responsibility in the child, who has to repay it. What’s more, education loans also offer tax breaks so the effective cost of the loan comes down.
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22 comments

  1. Amazing explanation 👌👌

    Reply
  2. 20years loan,why i need after 20years later that money

    Reply
  3. Increasing loan payments while your income increases is a good way. Overall, this is a well thought out explanation.

    Reply
  4. Yeh mutual fund s ka interest hamesha ek jaisa hoga
    Hamesha best returns milega kya

    Reply
  5. Yeh mutual fund s ka interest hamesha ek jaisa hoga
    Hamesha best returns milega kya

    Reply
  6. Very nice

    Reply
  7. Sir kya ye CORONA crisis me plot ya house ka rate kam ho sakta hai kya?

    Reply
  8. Mind-blowing sir 👌👌👌

    Reply
  9. Good job…
    Well explained…

    Reply
  10. I repaid 20 lakhs homeloan with proper strategy in 4 years.

    Reply
  11. Thnx bhaven sir
    bilkul bhi confusion nhi hui
    as apne itni achi trike se jo explain kia
    vaese m sochta hu ki kisi bhi trh k loan
    se jb tak back sako bacho

    Reply
  12. Very useful tricks to pay off loan early

    Reply
  13. Hello sir, hope u and your family is okk in this bad corona viruse situation… stay safe sir.. I don't have any home loan… But as a learning purpose it's a great video…. thanking you sir

    Reply
  14. Awesome

    Reply
  15. Nicely explained. Thanx.

    Reply
  16. Very detailed explanation SIR you are amazing SIR

    Reply
  17. How to pay more emi amnt.. as my emi gets auto debited frm my bank and don't get option to pay more

    Reply
  18. Need to mix option 1 and option 4.
    Thats good.

    Reply
  19. As usual, amazing video👏
    Thank you sir 🙏

    Reply
  20. Nice explanation on home loan prepayment and planning..thanks

    Reply
  21. Informative videos

    Reply
  22. What is your fees for consulting?

    Reply

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