28 February 2011
Early Closure / Pre-closure of Home Loan
Home loans are easily available and the procedures for applying also have become very simple. Many families opt for applying for a home loan for purchasing a flat. They are happy with the EMIs and payments are going as scheduled. But due to heavy interest charges the borrower is always on the look out for completing the loan tenure as fast as possible.
Early closure of loan can be done if the borrower has made arrangement of the required total amount left in the loan. The couple have other financial option available like increase in salary of both spouses, unexpected gifts from families of either side or maybe a property deal which gives them access to the amount required to repay the loan amount. In such case the borrower can opt for pre-closure of the home loan by paying the remaining amount left in the loan. During purchase of the flat one must also inspect the documents of home loan carefully if there is this option available. Some lenders apply cancellation fees and some also have penalty charges with the loan amount paid in large sums early to clear off the loan.
It is always understood that home loans though are the best option for buying a home they also increase the total value of the house by a substantial amount. Interest charges are paid along with the total principal amount of the house. The amount to be collected for prepayment of the home loan must also be ready as many investments require time to fulfil requirements of closure deals and the final amount to come in your hands. It always pays to pay off the loan early as you save on precious time and money which can be used for other family benefits.