A lot of you out there might feel that prepaying a loan is not that big of a deal. Some people don’t even consider it when they get an opportunity to do so. However, what you don’t realise is the longer you stretch the debt, the more you have to pay loan against property interest rate.
Apart from this, it also adds to your mental burden of having to pay instalments every month. Initially, stretching out your loan against property in India was considered to be a good thing since you did not have a lot of investment opportunities. But with time there has been a lot of development in the field of financial investments.
If, you are looking to change your mind about prepaying a loan against property interest rate, here are a few points that will help you do just the same.
1. New Tax Rules
Taxation rules play an important role whenever you are looking to invest or borrow finance. The same goes for a Loan Against Property Interest Rates. The Indian Government has decided to allow home loan borrowers to enjoy benefits of up to Rs.2 lakh per year. It means that by increasing your EMI and paying off the loan sooner, you will be able to take advantage of tax deductions. It can prove to be a saving grace especially when you are on a tight income.
2. Returns on Property
Even if you take a low percentage loan against property interest rate, your home is going to be at stake till the time you pay off the debt. It means that you will not be able to enjoy complete ownership of the property for a long time. By prepaying off your loan, you can not only get the ownership criteria sorted. But will also be able to enjoy the assured returns on property that happens each year. For instance, the value of a property increases by around 8% every year irrespective of any condition.
3. Interest Outflow
Another factor that proves to be a significant benefit when it comes to prepaying your loan against property interest rate is the outflow of excess money. For every month of the loan tenor, you end up paying a high percentage of interest. By spreading out your loan over the course of several years, you will actually pay almost 20% more than usual. So the ideal thing to do here prepaying your credit as soon as possible so that you do not have to waste money on high-interest percentages.
4. Financial Freedom
This point might not sound like a big deal to you at first. But while looking at it from an economic point of view, it can prove to be very advantageous. By getting rid of your debt in a shorter time than expected, you will be able to enjoy complete financial freedom. You will be able to enjoy the loan against property interest rate money for better things in the future and not having to worry about paying EMIs. It can even give you a chance to invest in new assets.
Additional Read: The Pre-Approval Process for Mortgage Loan
Lastly, a lot of people fear that by prepaying their loan they would not be able to enjoy the facility of quickly liquefying the asset. But don’t forget that you can still get an overdraft facility by the bank due to your good credit record. It means you can get instant cash whenever required even if you pay off your loan against property interest rates. All you will need to do is show them the loan against property documents required, and you are good to go.