After a few years into the Home Loan tenure, a time might come when the income increases and the borrower may decide to pay off the loan. Undoubtedly, housing loan prepayment is a lucrative option to reduce the loan burden.
However, is it always wise to take the leap? A Home Loan part prepayment calculator helps make an informed data-based decision. It is an excellent tool that helps calculate the cost-saving with loan prepayment and its effect on the loan EMI. However, before understanding how it works, let’s take a closer look at the prepayment option.
What is Housing Loan Prepayment?
Prepaying a Home Loan means making a lump sum payment for the home loan in addition to the EMI before the term ends. Since a longer tenure increases the total interest outgo, prepaying the loan is efficacious in reducing the interest payments, eventually reducing the debt burden. Prepayment entails a reduced loan tenure or a decreased EMI amount. Either way, it is a lucrative method of saving significantly on loan payments. However, before prepaying a loan, it’s crucial to calculate the prepayment charges to check if it is a beneficial option. This is when a Home Loan part prepayment calculator comes in handy.
What is a Home Loan Prepayment Calculator?
The prepayment calculator is an efficient online tool that helps borrowers determine the efficacy of Home Loan part prepayment. It depicts a borrower’s savings after prepaying a certain amount towards the housing loan. It helps compute the exact values based on the loan, tenure, and prepayment amounts.
A prepayment calculator showcases some crucial aspects of prepayment, including the actual and new principal to be paid, the number of EMIs, and the interest rate. Using the tool helps a borrower decide if they should proceed with the loan prepayment or not. Manually calculating these variables is error-prone, daunting, and time-consuming. So, rather than wasting time manually calculating these values, an online prepayment calculator helps make appropriate computations.
How to Use a Prepayment Calculator?
With the Fullerton Grihashakti Home Loan prepayment calculator, borrowers can compute the values with minimal effort and time.
Here’s how the online tool works:
- Visit the Grihashakti website and open the prepayment calculator tool.
- Enter appropriate values in the fields provided, including the loan amount, interest rate, loan tenure, number of EMIs already paid, and amount to be paid as a prepayment.
- Keep changing the variables until acceptable results appear on the screen.
- Double-check the information and click on ‘Apply Now’ to prepay the loan.
Benefits of Using a Home Loan Part Payment Calculator
Home Loan part prepayment allows borrowers to reduce their outstanding loan amount up to a substantial level. A reduced principal amount directly decreases the interest liabilities and subsequent EMIs. Prepayment limits the liabilities, especially when done at the right time. A calculator depicts the prepayment’s profitability upfront and helps make a better decision regarding the loan liability.
Moreover, part prepayment improves the applicant’s credit rating after the Home Loan settlement. When a borrower makes a prepayment, they take one extra step towards the loan repayment and keep the interest rate in check. The best part about using a prepayment calculator is that the user already knows the actual savings they will unlock. Home Loan borrowers should always try to make partial prepayments whenever possible across the tenure to obtain maximum benefits.
Points to Consider While Making Prepayment
While counting on a Home Loan prepayment, these are a few points to consider:
- Borrower’s Age: Prepayment is a lucrative option to maintain financial balance if the borrower is nearing retirement age.
- Future Expenditure: Contemplate the upcoming expenses and plan accordingly rather than exhausting all the accumulated amounts on prepayment.
- Tax Savings: The borrower is eligible for Home Loan tax benefits only during the loan term. So, be prepared to lose them by prepaying the loan.
- Total Savings: Before considering prepayment, look into the prepayment charges, loss of tax savings, and other parameters to ensure the savings exceed the expenses.
Home loan borrowers explore various strategies to reduce their debt. Prepaying a Home Loan is one such strategy that is quite popular among borrowers. The lending institutions levy prepayment charges based on the RBI guidelines. While many lending institutions provide the facility to prepay the Home Loan, a calculator will help examine the cost savings and know how it functions. While thinking of a partial prepayment, use the Fullerton Grihashakti Home Loan prepayment calculator to make an informed decision and make significant savings.
