By paying higher loan EMIs, a person can reduce the loan tenure and repay the loan faster. In this article, we will explain the benefits of paying higher EMIs.

In India, many financial institutions provide home loans at a competitive interest rate. Applying for a loan is the most feasible way to get funds for buying the house, and most people get a loan up to 80% of the property’s value. If you are a first-time loan applicant, you must know that the loan’s EMI is directly proportional to the amount you borrow; the higher the amount, the higher the EMI, and vice-versa. 

While you can apply for a higher loan and pay a higher EMI throughout the term, or you can increase the tenure to lower the EMI and make repayment more affordable. Typically, the lenders in India offer home loans for a maximum duration of 30 years. But, longer tenure means you must bear the repayment burden for a longer period. 

During the initial years, while you may pay the minimum EMIs, as you grow in your career and your income increases, you can consider paying higher EMIs. This will not only help you reduce your interest payment but also help you repay the loan faster. 

Benefits of Repaying Higher Home Loan EMIs

• Helps in Reducing Interest Expenses

This is one of the most important benefits of repaying higher EMIs. If you repay the loan over a longer tenure, then you must pay interest during that term. However, by increasing the EMI, you can lower the loan tenure. Therefore, the interest payable will also reduce. So, as your income increases, you can increase the EMI payment proportionately to repay the loan faster. 

You can use a housing loan EMI calculator to calculate how increasing the EMI can help you lower your loan term. 

• Tax Benefits

Home loan repayments also provide tax benefits. The tax benefits are available under Section 24, Section 80EEA, and Section 80C. The benefit can be availed on repayment of the interest and principal.

On the principal’s repayment, a home loan borrower can avail a tax benefit up to Rs. 1.5 Lakh under Section 80C. Furthermore, on the interest payment, a person can get a tax benefit up to Rs. Two Lakhs under Section 24. By paying higher EMIs, you can maximise the tax benefits and reduce your tax liability in a financial year. 

• Helps in Quick Repayment of the Loan

Most borrowers repay the loan in longer tenure. However, as you continue to repay the loan over a long duration, you may not have enough savings, and you may have to compromise on your other financial goals like retirement planning. 

Therefore, it is recommended to pay higher EMIs to save on interest and lower the loan tenure. While you may feel paying higher EMIs is taking away your liquid cash, it would help you save a significant amount in the long run. Not to mention, the faster you repay the loan, the sooner you become debt-free, and you get complete ownership of the property. 

• Helps in Improving Credit Score

When a person repays the loan regularly, his/her credit score improves. Furthermore, if the person repays the loan before the tenure, the credit score improves even more. Also, by repaying the loan before the tenure, a loan borrower will easily get loans in the future.

How to Quickly Repay the Loan

• Make Partial Payments

If a home loan borrower has sufficient funds, then he/she should consider partial payment of the loan. With the help of partial payments, a person can lower his/her outstanding principal amount. 

• Balance Transfer

If a borrower finds that their lender is charging a higher interest than the prevailing market rate, they can transfer the loan to a different lender at a lower interest rate. 

When you transfer the loan, the outstanding amount is moved to the new lender, and you repay the remaining amount at a revised (lower) interest rate. Thus, you can repay the loan faster as the EMI becomes affordable, and you can repay higher EMIs. 

Over the past years, African equity exchange-traded has risen considerably, and being a resource-rich continent increases the middle-class demographic. Africa is becoming one of the largest emerging economies, and it’s being predicted to become the largest market in the world. In recent years Africa indeed did face hits economically as well as politically. And if you wish to know more about this country, then you should check out some of the best African documentaries that explains everything you never thought of Africa. But the prediction of the growth has not been proved to be false due to these factors. And in this article, we will discuss some of the positive indicators that prove that you must invest in Africa.

• Young And Growing Population:

With a population of more than 1 billion and is expected to get doubled up by mid-century. While most of the countries are getting aged and have less potential in the market, on the other hand, Africa is young and has many opportunities left to explore. And according to the expert’s study in investment markets, the global workforce may be shrinking in the future, but in the case of Africa, it is expected to grow and will surpass India and China. Moreover, Africans also have consumers who want all the latest updated tech-gadgets.

• Customers Are Changing:

With the growing economy of Africa, there has been a significant development, and expectations have increased. Education and urban professionals are more aware of the current brands and have become quite selective when it comes to consumption. You can look at best African documentaries such as The Square to know more about how people have the power to change everything.

• The Economy Is Getting Strengthened And Diversified:

In recent years, there has been a considerable growth downfall in exports of oil, but the rest of the product is still growing. Countries are not solely dependent on the oil resources for their economic growth. Typically, smaller economies are progressing towards economic reform and giving competitiveness to others in the market. African countries are driving to diversify beyond commodities.

• Money To Spend And Love For The Major Brands:

African consumers are increasing rapidly and spending trillions of amounts in a year for branded consumption.

• Digital Transformation:

Africa is one of the leading countries to adopt mobile, which offers the biggest cross-sectoral economic opportunities. Most of the companies are using mobile networking and digital technology to maintain their supply chain. Consumers have moved towards digital payment rather than using cash at hand.

Applying for loans is a very crucial decision be it for personal or business reasons. It is important that you choose the right financial companies to help you lend a loan with the right guidance and best terms throughout the life of your term. A trustworthy and professional loan lender is what you should be looking for rather than going for easier and intriguing options. 

So here are the factors you should be considering while choosing a financial company for a loan:

• Experience and Credibility- The foremost and the most important element while selecting a financial company is to check their credibility and how experienced the financial institution is. A good financial company like Accord Financial will help you understand the full facts and details of your borrowing and won’t dupe you into paying unexpected extra costs beneath your repayments. If you haven’t heard about the company before, google the company and look for reviews from their previous and current customers. 
• Interest Rates- When you think about applying for a loan, the interest rate is probably the first thing that comes into your mind. The lower the interest rate you have to pay for your loan, the better and less stressed you will be. However, the rates won’t be the same as mentioned on the firm’s website as the actual rate will depend on many other factors like your credit history, kind of loan you are applying for, etc. But before applying for a loan with a certain company, check with two or more companies and compare the rate of interests given by each one of them.
• Flexibility Of Payments- When you are looking for a loan lender, always find out how flexible are they willing to be with your repayment schedule. Enquire about whether they will be willing to put back for a month or so if you are not able to make the ends meet for that month? And how much penalty will you be charged for late payments? 
• Additional Services Provided- A good financial institution will always answer your queries and clear your doubts about your loan application. Support from your financial institution is important and also make sure to find out how long will it take for your loan provider to complete the procedure and lend the money.

Make sure to consider all these factors while choosing a financial institution for your loan application.