How Home Mortgage Loan is Helpful?

RBI relaxed the securitization guidelines in December 2018. This has led to the reduction in the holding period for property having a maturity period of 5 years which stood at 1 year to 6 months. This will open up roughly around Rs 60,000 crores of the mortgage loan portfolio for securitization which also includes both home mortgage loans as well as loans against property. This change has been affected due to the series of defaults by infrastructure lending and development firm IL&FS which resulted in the amount of liquidity got tightened up and led to a downturn. This increases the number of assets that come with a shorter holding period and also promotes investing in debt security. Some of the factors like the introduction of PMAY and reduction in the stamp duty cost for women buying a property have increased the finance option that is available.

Let’s see here how to pay off your debt early when you avail home mortgage loans:-

• Pay high-interest debts first- It is quite important that you prioritize your repayment. For this, you have to make out a list of all the outstanding that you have including the ones that have higher interest rates. First, you pay the debt with a higher interest rate and the list will guide you in clearing all your debts easily. By this way, you will bring down your interest burden considerably.
  
• Increase your EMIs as and when your incomes rise- Whenever you get a hike in your income, go for higher EMI on your loan. This way you can clear your loan faster and you need not have to pay a lump sum payment. But you should ensure that this will not make you to default on other debts that you have. You can use the mortgage loan EMI calculator to calculate the EMI amount.
  
• Use investments to make prepayments- If you feel that your debts are damaging your finances, then use your investments like mutual funds or shares for making prepayment towards the principal. This will not only make repayment simpler but also lower the interest on it also. You can even go for loan against certain investments or sell your gold holdings or real estate to access the money instantly. But these should be used for fulfilling your long term goals so you should use it as a last resort.
  
• Loan against property helps in debt consolidation- When you have multiple loans, go for debt consolidation. This you can do it by going for the loan against property. When you go for it, you will get benefits like easy online account management and also a Flexi loan facility. This will make you pay only the interest on the amount that you actually use. 

Thus, you can go for the above with your home mortgage loans. 

Read Reference: How Relaxing Securitisation Guidelines affect the Availability of Mortgage Loans in India?