Effective Ways to Pay Off Your Home Loan Early and Efficiently-How to Repay Home Loan Faster

Effective Ways to Pay Off Your Home Loan Early and Efficiently


Buying a home is a significant achievement, but the repayment of a housing loan can sometimes feel like a financial burden. The idea of being debt-free and owning your property outright is a dream for many homeowners.

Fortunately, there are practical strategies you can employ to pay off your Home Loan faster, save on interest, and attain financial freedom. Let’s explore practical ways to achieve this goal and provide insights into how each method can work for you.

How to Repay a Home Loan Faster?

Here are a few actionable tips that can help you pay off your Home Loan faster and achieve financial freedom sooner:

Increase your EMI

One of the simplest and most effective ways to pay off your Home Loan faster is by increasing your Equated Monthly Instalment (EMI). By paying more than the minimum amount, you will be able to reduce the outstanding principal amount more quickly, which, in turn, will shorten the loan tenure. While increasing the EMI might strain your monthly budget initially, the long-term benefits of reduced interest payments and early debt freedom make it a worthwhile strategy.

Generate Additional Income Through Renting

Consider making some additional money by renting out a part of your house. Renting can be an excellent way to augment your income and create a source of income specifically for Home Loan repayment. To prevent potential issues, adhere to local laws, sign a rent agreement and choose trustworthy tenants.

Make the Most of Tax Exemptions

A Home Loan can be expensive, but it comes with several tax benefits that can save you a lot of money yearly. You can claim a tax deduction for house loan interest payments of up to Rs 2 lakh each fiscal year under Section 24 of the Income Tax Act 1961.

In addition, the Income Tax Act of 1961 allows you to claim deductions up to Rs 1.5 lakh annually under Section 80C on the principal repayment and up to Rs 50,000 (applicable to properties costing up to Rs 45 lakhs) under Section 80EE.

Use Windfall Gains and Bonuses to Repay Loan

If you receive a generous bonus, avoid spending unnecessary purchases like the latest smartphone or a new TV. Instead, use the money to pay your Home Loan aggressively. Windfall gains, such as income tax refunds, maturity proceeds from life insurance policies, and bonds, can be instrumental in reducing the principal amount and, consequently, the interest paid over the loan term.

Refinance to a Lower Interest Rate

Interest rates can change, so if they have decreased since you took out your Home Loan, you might want to refinance to a lower rate. You can change the repayment period or move to a lower interest rate, which will reduce the burden of the EMI on your finances. To ensure the benefits of refinancing outweigh the related costs, it is crucial to evaluate the costs thoroughly.

Opt for Prepayment or Part-payment

Many lenders of mortgages give customers the choice of making prepayments or partial payments without paying penalties. Use any extra money, such as bonuses or savings, to make these prepayments.

Before signing a Home Loan agreement, it is essential to check whether a prepayment clause exists. Spend some time examining whether there are any additional costs or fees for making mortgage prepayments.

For example – SMFG Grihashakti Home Loans with floating interest rates have no foreclosure charges for part-prepayments or prepayments, provided the loan is for non-business purposes.

Debt Consolidation

Consider merging your loans into one if you have several to pay off to reduce loan repayment terms and pay off your mortgage more quickly. Consolidating your debts can help you pay off your loans efficiently, whether they are several small loans or multiple mortgages. You can pay off numerous mortgages without hassles by obtaining one large loan at a lower interest rate rather than paying several loans with high-interest rates.

Take Advantage of Home Loan Calculator

Before making any loan decision, it is always better to use a Home Loan calculator to calculate a loan’s interest rate and EMIs. It helps borrowers calculate their EMIs, before applying for a loan or making a prepayment, to manage their finances better.

Here’s how it helps and how to use it:

Early Repayment Planning

You can experiment with different repayment strategies, like larger monthly payments or additional lump-sum payments, to see their impact on the loan term and total interest paid.

Identifying Prepayment Opportunities

Identify times in a year when you can make additional payments, like after getting a Diwali bonus, an increment in your job, or a lump sum after FD maturity. This will help you reduce your loan balance.

Refinancing Assessment

Evaluate the potential benefits of refinancing by comparing new terms with your existing loan, helping you decide if refinancing can lead to a quicker loan payoff.

The formula used to calculate the fixed monthly loan payment is:

P = (Pv * r * (1+r)^n) / ((1+r)^n – 1)


P = Principal loan amount

R = Monthly interest rate

N = Loan tenure in months

How to Use the Home Loan Calculator for Faster Repayment?

Visit your preferred lender’s website and do the following to calculate your EMIs to make a strategy to repay your loan faster:

Enter the principal loan amount, current interest rate (monthly), and original loan tenure in years in the calculator.

Once you enter the details, the calculator will provide a fixed monthly payment.

Explore Early Repayment Scenarios

Experiment with higher monthly payments or additional lump-sum payments to see how they impact the loan term and interest.

Identify Prepayment Opportunities

Determine the best times to make extra payments without straining your budget.

Evaluate Refinancing

Input interest rate and loan tenure you may get from your new lender to compare potential savings.

Set a Repayment Plan

Use the calculator’s insights to create a concrete repayment plan aligning with your financial goals.

By utilizing a home loan interest calculator for computing interest and EMIs, you can take control of your loan repayment strategy, accelerate payoff, and save money on interest in the long run.


You can use the tips in this article to repay your loan early and efficiently without stressing your finances. You can use a Home Loan calculator online to make a well-informed decision. Besides savings, paying off your Home Loan early also gives you stability, peace of mind, and the freedom to pursue other goals without debt.

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