Know How to Own Multiple Home Loans Smartly

The home loan market in India is expected to grow at a CAGR of 22% between FY2021- FY2026. The boom of this sector is primarily driven by growing urbanisation and feasible housing interest rates and other terms. As a matter of fact, RBI has cut repo rates seven times since 2019, reducing housing loan interest significantly. Thereby, it is a golden opportunity for existing borrowers to facilitate prepayment of home loans and improve their credit score. 

Moreover, to make repayment effortless, individuals can use a home loan prepayment calculator and get an overall idea of the repayment structure instantly. 

Following are some of the tips that you can consider to repay multiple home loans smartly. 

  • Decide your priority 

If an individual has more than one debt to repay, it will be wiser to decide which debt needs to be paid the earliest. In this regard, he/she can consider the due date of the repayment to make things easier. Service those dues whose tenure ends sooner. 

  • Start with higher cost loans

In general, borrowers tend to focus on repaying the low cost loans first to attain mental satisfaction. However, in reality, it costs more and drains a lot of money, without reducing debt significantly. Therefore, even if it seems difficult to repay a higher cost loan first, you can limit your financial burden by choosing to do so.  

A home loan generally involves a substantial amount and repaying the same can prove difficult. Therefore, borrowers should opt to repay the loan that comprises the highest amount. It will at once reduce the debt burden, allowing borrowers to service the other dues without any additional worries. Such a technique of debt management is called “debt avalanche.” 

  • Opt for a balance transfer 

While using a home loan prepayment calculator can help in repaying a loan earlier than its tenure, you need to enforce strategic plans to tackle multiple debts. A home loan balance transfer is one such facility that can restructure your repayment schedule with lower interest rates. For instance, one of the benefits of a home loan balance transfer is that you can transfer your existing loan by paying the foreclosure charges only.  

Availing such a facility, you can compare the interest rates with different lenders and transfer the outstanding loan balance for lower interest rate and other additional terms. 

  • Consider the tax benefits 

Managing multiple loans can be difficult. Nonetheless, specific tax benefits can lower the overall cost of a loan significantly. For instance, availing multiple home loans can save a substantial amount through various Income Tax Act provisions. 

Under 80C article, borrowers can enjoy a tax exemption of up to Rs.1.5 lakh on principal payment. Similarly, section 24 allows a maximum deduction of up to Rs.2 lakh on interest payment. Moreover, under article 80EE, first-time home buyers can receive a tax deduction of up to Rs.50,000 on the loan repayment. 

  • Adjust the cash flow 

Another effective way to tackle multiple home loans is liquidating unused inventory or assets to fund the repayment. Moreover, you can also make full use of your mutual funds’ dividends and returns from other investments to procure instant funds. In this matter, you can also take help of a home loan EMI calculator with prepayment features to get an idea of how much money you need to reduce the monthly burden from your multiple loans.

  • Think of debt consolidation loan 

If even after employing all the tactics, borrowers cannot arrange the sufficient funds to repay the debts, they can opt for this option. Borrowing this line of credit, they will be able to service dues efficiently without curtailing other necessary expenses. 

If managing several credits at once proves difficult, ensure you avail a loan to consolidate all other advances. Doing this will not reduce your liabilities, but will improve fund management. Reputed lenders allow you to utilise such features. 

These financial institutions also provide pre-approved offers ensuring astraightforward and promptloan approval process. Such an offer is available for different financial products like loan against property, home loan and others. You can also check your pre-approved loan offer instantly, mentioning your name and contact number. 

Hence, along with managing multiple home loans smartly, individuals also should follow a robust guide to close a home loan efficiently. It will help them to live a debt-free life and also provide enough room to carry out other necessary financial liabilities. 

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