Any individual with a burden of the loan on his shoulders just wants to get away with the loan as soon as it is possible. However, that is not the case with every individual. There are a fair amount of people who do not take the loan as a burden and are fine with the periodical payment of the loan. But most of us aren’t comfortable with this idea. Thus this is where the Home Loan prepayment comes into play.
On receiving an annual bonus or some lump sum amount we usually look forward to getting away with the loan. Thus we consider prepaying the loan which indeed is the right thing. While doing or thinking to do so involves a lot of thinking such as how much are you going to save if you prepay the loan, are you free of other financial responsibilities? These are a few questions which linger in our heads when we talk about loan prepayment.
There is a situation where an individual receives a financial boost through bonus and he goes all out in prepaying the loan. There are several reasons why an individual prefers paying the loan as early as possible. It might well happen that soon after you have prepaid the loan, you might suffer from a loss job, the death of a family member, such unfortunate events are unpredictable and you don’t want to bear the burden for tomorrow. Thus prepayment of loan is considered to be wise. There are several online Home Loan part pre-payment calculatorsavailable which will help you to get an approximate idea about the amount.
What are the other benefits that come with the prepayment of Home Loan?
Another Loan: If you are repaying the loan before the due date you are basically signaling the bank that you have a better financial standing. What this does is that it ensures banks’ trust in your financial capabilities and as soon as you are done with the prepayment of one loan you can very quickly opt for another one. Given the banks’ complete trust and faith in your abilities to repay, you can easily get another loan.
Reduced Interest Rate: It is a fact that prepayment of the loan will bring about a lot of savings in the interest rate. If you decide to prepay the loan you can, in fact, save the bulk amount that you were going to be charged every one month. Banks provide considerable benefits in terms of prepayment of loans. Various factors have to be analyzed before an individual opts for prepayment of loans.
Negotiations: Prepayment brings about a fine negotiation between a bank and the customer as the borrowed money is be repaid before the due date which in turn is a long way. Thus bank negotiates with the borrower and provides them a lower rate of interest and certain benefits to help them get rid of the loan amount.
One amazing feature of Home Loan is Home Loan Balance Transfer where you can transfer your outstanding loan amount from one bank to another. All the banks out there are competing with each other to provide the customers with the most customer oriented Home Loan Balance Transfer. These banks provide these services which help the customers to pay their outstanding loans at a low rate of interest and thus save a lot in the process.
There are various online tools such as the EMI Calculator which helps you to calculate EMIs based on the duration you have selected. Thus for a small period, the amount will be high while the interest rate would be low, on the contrary, for a longer period, the amount will be low but the interest rate charged would be high.