Home Loan: Who doesn’t want to have a dream home? Are you also wanting to buy your home? Due to not enough money, try to take a home loan? Then this article is for you. A home loan proves to be very helpful in realizing your dream of home. Many people take a home loan but decide to prepay in advance. By the way, experts also say that the more money you save in interest on a home loan, the sooner you get ownership of the house. In such a situation, the question comes: how correct this decision is.
How right is the prepayment decision?
Many banks or financial institutions take a penalty on the payment of loan prepayment. If you also pay a penalty for prepayment, then this decision is not right at all because you pay more for it. In such a situation, you must evaluate the terms and conditions related to the loan.
According to Atul Manga, if the interest on your home loan is very high and you invest to get more returns, then you can prepay the home loan. However, prepayment reduces your liquidity, so you may not have money for unexpected expenses. You always need to save money for emergencies. Therefore, one should decide their commitments before deciding to prepay the home loan. Everyone’s situation is different in home loan prepayment. At times, prepaying a home loan can be better for your financial future.
What experts say?
Experts say that prepayment may reduce the tenure of the loan, but you have to pay less interest over time. Another benefit of home loan prepayment is that your monthly budget becomes somewhat lighter. Prepayment of a home loan speeds up the process of loan repayment. Because the principal amount is directly lower than the amount you paid, thus reducing the remaining loan repayment period for you.
Home loan prepayment is a good decision if your income is stable and you do not need money for any additional expenses immediately. If you have an emergency fund and insurance coverage, you can lighten your monthly budget by prepaying the home loan on time. However, there can be many advantages and many disadvantages to prepaying a home loan. So evaluate your financial situation, consider financial goals, and think about the penalty if there is any on the loan.