Home Loan Tips: Acquiring a home loan allows us to realize our aspiration of having a home. Nonetheless, following that, paying it back punctually appears to be a significant challenge. If the loan payment is delayed, the CIBIL score will deteriorate. In addition to this, a fine will also need to be paid. In this scenario, an effective way to eliminate the home loan payment is through pre-payment. The borrower has the choice of pre-payment to settle the loan early. In this, he repays a portion of the loan. Upon choosing this, the loan EMI decreases and the loan sum also decreases. This is an excellent method to achieve financial independence quickly.
We will explain below which fees the bank or financial institution imposes on the borrower
If you are considering choosing this option, we want to inform you that the bank incurs charges for these. We will explain below which fees the bank or financial institution imposes on the borrower. Numerous banks impose a fee for prepayment to deter the early settlement of the loan. This fee may be a percentage of the remaining loan balance or a set amount. Nonetheless, this charge is applied in the early years of the loan. If an individual borrows money for 20 years and chooses to prepay within the initial 3 to 5 years, the bank or financial institution imposes a penalty. In fact, the bank imposes this fee to offset its expenses. It is essential to compute the EMI and savings prior to choosing this pre-payment option. You need to consider if the penalty you are incurring exceeds the interest earned from your savings. An online calculator can be utilized for this purpose.
Ensure that pre-payment does not impact your emergency fund and savings. If it impacts savings, you could encounter financial issues.
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