The home loan interest rate is generally lower than the rate of interest charged on other loans such as car loan, personal loan or credit card loan. Therefore, if you want to reduce debt, it is better to prepay high interest-bearing loans as against housing loans which carry a lower rate of interest.
Home loan customers are confused whether to utilize the tax benefits of home loan or save on interest. Tax benefits of home loan are shown in the table below. But by prepaying the home loan For Self-occupied property borrower has to forego Tax benefit on HRA allowance.
home loan, the interest component in the EMI is highest. Therefore, prepayment of loans in the mid-to-late stage may not give you the full benefit of saving on interest. In such cases, it is prudent to invest the surplus funds.
When it comes to loans, fully paying loan does not mean that loan is closed. To ensure that the loan is fully closed you need to take few steps.
You must ensure that you receive all your original property papers back and get the acknowledgment that you have received them, from the bank. You need the sale deed in resale or legal purposes in future
Update your credit report It is your duty to confirm the update of your credit report. This update on the credit rating agency’s website takes 40 to 60 days
The Encumbrance Certificate (EC) proves that the property is free from monetary or legal liabilities.Get No Objection Certificate (NOC) from the lender
get Lien terminated. Lien is a legal right granted by the owner of the property, by law or otherwise acquired by a creditor. It serves as a guarantee for an underlying obligation, such as the repayment of the home loan.