Home loan repayment
Paying EMI on time increases your credibility. For payment on time, most customers schedule EMI deduction along with your salary date so that you have enough funds in your accounts. This reduces the chance of payment default. If the EMI defaults, the lender may impose a penalty on you. Also, it also negatively affects your credit score. Well, this was the matter of EMI and its timely payment. But do you know that if you pay more amount of home loan EMI then what will be the benefits. Let us tell you.
Home loan repayment with higher EMI
The amount that is often taken for a home loan is higher. In many cases it goes into crores. Lenders usually give up to 30 years to repay home loans. You can decide the repayment period of the loan according to your convenience. Your period determines the EMI.
Like any other loan, home loan EMI also has two parts – principal amount and interest ie interest. In the beginning, interest is higher than the original money. Whereas in the later period the principal money becomes more and interest is reduced. This means that the higher your EMI, the lower your interest will be and the sooner the principal will be paid.
Benefits of paying more home loan EMI
Savings on interest
A big advantage behind paying off the EMI of the loan is the saving of interest. The EMI amount has a direct impact on the interest cost of your home loan.
In short, the higher the EMI, the sooner it will be paid and the lower the total interest cost. You can also use the online home loan EMI calculator. This will give you an accurate idea of total cost, total savings and estimated EMI, which you can pay.
Quick repayment of loan
When you pay more home loan EMI, repayment of the loan is also done quickly. Repaying a home loan not only reduces your tension but also instills confidence in you to become financially stable. You may have to cut your expenses to pay more home loans, but it is beneficial.
This is another benefit of expanding your home loan EMI. Your credit rating also improves with the fact that you repay the loan before the fixed period. This makes you reliable for getting a loan in future. Higher EMI shows your ability to take money and by repaying the loan in a short period, you show the liquidity of your great assets to the lenders. Banks take this very seriously and consider it a difficult task. Whereas lenders see the financial capability to give you any other loan.
Tax exemption on repayment of home loan is one such thing, for which most customers are worried. Tax exemptions in home loans can be availed under section 80C, section 24 and section 80 EEA of the Income Tax Act. These benefits are given on your home loan EMI separately on principal component and interest component. A person can get a tax exemption of Rs 2 lakh under section 24 and up to Rs 1.5 lakh on principal component under section 80C. In many cases, customers are unable to make much profit because they are paying less EMI. By opting for the option of higher EMI amount, you will be able to get more tax exemption.
Proper use of money
You can increase your home loan EMI only if you have sufficient funds. If you are earning more than any other source then you can increase the amount of your home loan EMI. This will give you many benefits, which are mentioned above. Also, you will be able to invest money at the right place, which will also give you good returns. Suppose you have funds and invest it in the stock or in luxury, then you will not get the benefit that you will get by paying the home loan in full