{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.indusind.com\/iblogs\/manage-your-finance\/how-can-you-reduce-your-home-loan-tenure-by-7-years\/#BlogPosting","mainEntityOfPage":"https:\/\/www.indusind.com\/iblogs\/manage-your-finance\/how-can-you-reduce-your-home-loan-tenure-by-7-years\/","headline":"How Can You Reduce Your Home Loan Tenure by 7 Years?","name":"How Can You Reduce Your Home Loan Tenure by 7 Years?","description":"Summary: Reducing the home loan tenure can help you become debt-free faster and save substantial interest. Some effective strategies to shorten the loan tenure include paying extra EMIs, making part payments, considering a home loan balance transfer, and foreclosing the loan. These strategies not only reduce the overall cost of ownership but also free up...","datePublished":"2025-02-12","dateModified":"2025-02-20","author":{"@type":"Person","@id":"https:\/\/www.indusind.com\/iblogs\/author\/indusind\/#Person","name":"IndusInd Bank","url":"https:\/\/www.indusind.com\/iblogs\/author\/indusind\/","image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/8169561f34fb61e737060f1a537a86e2?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/8169561f34fb61e737060f1a537a86e2?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"IndusInd","logo":{"@type":"ImageObject","@id":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/logo-2.png","url":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/logo-2.png","width":201,"height":86}},"image":{"@type":"ImageObject","@id":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/How-can-you-reduce-your-home-loan-tenure-by-7-years.jpg","url":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/How-can-you-reduce-your-home-loan-tenure-by-7-years.jpg","height":288,"width":764},"url":"https:\/\/www.indusind.com\/iblogs\/manage-your-finance\/how-can-you-reduce-your-home-loan-tenure-by-7-years\/","about":["Manage your Finance"],"wordCount":1234,"articleBody":"Summary: Reducing the home loan tenure can help you become debt-free faster and save substantial interest. Some effective strategies to shorten the loan tenure include paying extra EMIs, making part payments, considering a home loan balance transfer, and foreclosing the loan. These strategies not only reduce the overall cost of ownership but also free up your funds for other investments or financial goals.Buying a dream home is a significant life milestone for many, evoking a sense of pride and fulfilment. However, it also comes with major financial commitments for the long term. While a home loan offers a secure and convenient way to finance your property, it can tie up a part of your monthly income for an extended period. Moreover, borrowers might end up paying nearly double the loan amount, increasing the overall cost of ownership.For example, on a loan of INR 50 lakhs at 8.6% interest over 20 years, you’ll have to pay a staggering INR 54 lakhs as the interest alone. Discerning borrowers can reduce this inflated cost of ownership by lowering the loan tenure by a few years. This helps you become debt-free quickly and can free up your finances for other investments or future goals. In this article, we’ll explore a few practical tips to reduce your home loan tenure by 7 years.Tips to Reduce Home Loan Tenure by 7 Years1. Pay Extra EMIs Every YearPaying a few extra EMIs yearly can significantly reduce your home loan tenure and interest payout. Consider making extra EMI payments quarterly or bi-annually to reduce the principal component of the loan. This is because most home loans follow the reducing or diminishing balance method, wherein the interest is calculated on the outstanding principal amount. Therefore, the quicker you reduce the principal, the less interest you will pay, and the lower the tenure will be.For example, suppose you take a loan for INR 80 lakhs at a 9% home loan interest rate for a tenure of 20 years. Your total interest payout will be INR 92,74,739.Here’s how your loan tenure and interest payout will decrease if you pay a few extra EMIs in a year:Extra EMIs per yearReduction in loan tenure (in years)Savings in interest14INR 20.7 lakhs49INR 47 lakhsNote: For the reduction in loan tenure and interest savings, you must pay the extra EMIs consistently every year.2. Consider Part PaymentsAnother effective way to reduce your EMI tenure is to make part payments on the loan. A part payment is when you pay a lump sum amount towards the loan principal whenever you have surplus funds. This can be from a bonus, tax returns, or any other non-recurring source.Regular part payments can significantly reduce the outstanding principal, lowering the loan tenure.3. Opt for Home Loan Balance TransferA home loan balance transfer is a secure way to transfer your loan account to a different bank or lender for lower interest rates or better terms. This way, you can reduce not only your loan tenure but also your overall interest burden. By securing a lower interest rate, you can continue paying the same EMIs while reducing the loan tenure.But before applying for a home loan balance transfer, it’s essential to consider additional costs like processing fees to make an informed decision.4. Consider Foreclosure or Preclosure of the LoanLoan foreclosure or preclosure is the process of repaying the entire outstanding loan amount in a lump sum before the tenure ends. It is different from part pre-payment, where you pay a substantial amount towards the loan but don’t close it entirely.If you have enough funds to pre-pay the loan, considering this option can help you shorten the loan tenure and save significantly on the interest payouts. However, before foreclosing the home loan, make sure to consider the penalty or charges levied by the bank. As per RBI guidelines, banks can’t charge any foreclosure penalty if the home loan is taken out on a floating interest rate basis. For fixed interest rates, the penalty may be up to 3% of the outstanding loan amount.Avail of Prime Home Loans from IndusInd BankBorrowers can significantly reduce their loan tenures through simple strategies such as paying extra EMIs in a year, making part payments, opting for a home loan balance transfer, or foreclosing the loan for lower interest rates. Moreover, these strategies also reduce the overall interest burden, making homeownership more cost-effective.Make your homeownership dream come true with affordable home loans from IndusInd Bank. Enjoy attractive home loan interest rates, minimal documentation, flexible tenure, and doorstep services for an unparalleled borrowing experience.So what are you waiting for? Visit the IndusInd Bank official website and apply for a home loan online today.Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct\/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.Share This:"}