Best Strategies to Pay Home Loan Faster

Clearing your home loan dues is necessary to keep a clean credit profile. A decent credit score (above 800) can help you get the best interest rates. 

However, not everyone can manage their finances well. And, in this age of rising inflation, managing everyday expenses while paying home loan dues is extremely challenging. 

Worry not, as this article contains the best strategies to pay home loans faster without burdening your finances. While you can follow some strategies mentioned below at any time during the loan repayment period, some techniques can only be applied before applying for a home loan. Additionally, for those seeking to streamline the property ownership process, exploring options like how to apply patta online can simplify administrative tasks associated with property acquisition.

Check the ultimate strategies to pay home loans faster. 

4 Strategies to Pay Home Loan Faster 

  1. Increase the EMI Amount

Indian lenders generally cap the maximum EMI between 40% and 50% of your net monthly income. However, many borrowers keep the EMI at less than 30% of their monthly income. 

While this leaves you with more cash in your hands, it also keeps you away from your dream of becoming debt-free earlier. 

So, increasing the EMI amount is the easiest way to pay a home loan faster. You can use a home loan EMI calculator to check the real effect of the home loan rate of interest before applying for home loan.  

When you increase the EMI, inform your lender that you want the enhanced amount to go towards the principal and not the interest. If your principal reduces, the interest will automatically reduce.

Hence, increasing your EMI enables you to close the loan earlier. While applying for a home loan is the best time to increase the EMI, you can also do it during the loan repayment period. 

  1. Prepay Often

Home loan prepayment or part payment is an excellent way to reduce your liability. If your home loan is on a floating rate of interest, you can prepay without paying the penalty. Use any extra income or windfall gain to settle your loan debt as often as possible. 

Unlike increasing the loan amount, you can adopt this strategy only during the loan repayment period. However, inform the lender to use the prepayment amount to clear the principal, not the interest. 

When you prepay a part of the principal, your interest amount also decreases. This enables you to close the home loan earlier than the mentioned last date. 

Hence, regular prepayments or part payments help you reduce the interest and loan term, which enables you to become debt-free faster.  

  1. Reduce the Loan Term

Another good strategy to pay your home loan faster is to reduce the loan term. You can implement this strategy when applying for a home loan or during the loan repayment term. 

A long-term home loan means more interest. Conversely, lenders often offer discounted rates when you choose a short-term home loan. 

While a shorter tenure may mean an immediate escalation in the EMI amount, it effectively reduces the current home loan interest rates so that you can save more. Besides making you debt-free faster, a short-term home loan increases your eligibility to avail of new loans. 

It also improves your credit score, enabling you to avail of low-interest loans in the future. 

  1. Transfer Your Loan to Another Lender

A home loan balance transfer is a fantastic way to reduce your home loan liability. Home loan balance transfer refers to the process of transferring your unpaid principal and interest to another lender offering lower home loan rates of interest. 

So, if your current interest rate is 9.50% and another lender offers 8.50%, you can transfer your loan from one lender to another to save money. 

However, you must check the fees and charges levied by the current and new lenders before applying for the home loan balance transfer facility. Sometimes, the fees are so high that the actual benefit of the balance transfer becomes nil. 

Hence, opt for the home loan balance transfer facility only after getting assured that the real savings are much higher than the cost of transferring the loan.


Besides the strategies mentioned above, you must also manage your finances well since any escalation in the loan EMI can burden you financially. Considering home loan rates of interest start from 7.50% now is the best time to apply for a home loan or transfer your balance to a new lender.

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