A Complete Guide to Home Loan Prepayment Calculator - Loan Trivia


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Monday 19 September 2022

A Complete Guide to Home Loan Prepayment Calculator

Prepayment Calculator

Home loan comes with a long repayment period, up to 30 years. At the time of availing of the loan, individuals may choose a longer repayment time to keep the EMIs manageable. However, while paying off the loan, you may try to prepay the loan to save money on interest payable and reduce financial burden. The other reason of prepaying the loan can be inspired from the additional funds one may have saved over the years. Many lenders allow for prepayment of the home loan. The prepayment can either be a lumpsum amount towards the repayment or the full payment of the outstanding loan amount for foreclosing the loan. You need meticulous planning to prepay the home loan. A home loan prepayment calculator can immensely help the borrower.   

Home Loan Prepayment Calculator

For planning the prepayment, you may like to know about the impact of the prepayment on the loan. This becomes specifically important if you are planning to pay a lumpsum amount in the initial period of the loan. A home loan prepayment calculator can take care of all your requirements. Here is a complete guide for using the calculator:

  • Search a calculator or visit the website of financial institutions. There, you would find the home loan prepayment calculator. You can use the prepayment calculator of Bajaj Housing Finance, which is a leading home loan lender. The calculator is reliable and produces instant results.

  • Different calculators can function differently. Usually, there are two options to enter the details: through moving the sliders to key in correct values or by manually entering the values.

  • The calculator asks you to enter the loan amount, repayment period (in months), home loan interest rate and the lumpsum amount you wish to pay.

  • After entering the details, the prepayment calculator can either show the savings automatically or you can click on “done” icon for seeing the results.

  • Once you see the effect of the prepayment on repayment tenor and EMI, you can choose the suitable option.

For using the home loan calculator, borrowers do not have to make any payment. Also, this is a great tool to replace the manual calculation and receive error-free results. 

The timing of the prepayment is very important for saving additional money on home loan in India. You should be aware about the current home loan interest rate to take advantage of this. Your endeavour should be to make the prepayment whenever home interest rate goes down. Using this technique, you can reduce the principal outstanding considerably. If the interest rate increases after your prepayment, it would not hurt your finances. You can also explore the option of home loan balance transfer. This feature of home loan allows you to change the lender. If your home loan lender is charging a high interest rate, balance transfer can be a means to secure a lower interest rate and bring down the cost or the repayment tenor of the loan.

However, before making any prepayment, consider the costs of the prepayment. Proceed with the prepayment only if this benefits you despite paying the costs. Another objective of prepaying home loan can be to become debt-free as early as possible. Also, borrowers must assess their financial condition before deciding to make the prepayment. Any lumpsum payment or loan foreclosure leading to an adverse financial situation should be avoided.

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