Should I close the loan or invest?

The simple rule- If you think you will not be able to generate better post-tax returns than what you are presently paying for home loan, prepay the home loan immediately. In all probability, you will be able to earn more money on your investment in mutual funds than the interest which you will be paying on home loan.

Is it better to repay housing loan early?

If your total interest outgo is greater than the amount of tax deduction then it is wise to invest the surplus money in closing/reducing the home loan. In such cases, it is not advisable to foreclose the loan because the tax benefits will bring down the effective interest rate.

Is prepayment of home loan tax exemption?

As regards claim of prepayment penalty paid by you, as per the provisions of income tax any fee or charges paid in connection with the loan is also treated as interest and therefore you will be able to claim the amount of processing fee paid by you under Section 24(b) along with the amount of interest paid by you …

Should I prepay or invest?

As a thumb rule, you should go for investment, instead of prepayment, only when the post-tax return from the investment is likely to be higher than the effective cost of the housing loan.

Can I prepay my home loan?

You may prepay a fixed sum on a regular basis thus reducing the loan outstanding. Lower the loan outstanding, lower will be the interest that you will pay. The prepayment done in the earlier years is better than doing it in the later years.

Can we prepay home loan before PMAY subsidy?

Yes, the PMAY subsidy availed is subject to keeping the loan alive for the entire period. In case the loan is prepaid the subsidy amount is reversed and you will lose part of the benefit.

What happens when you prepay a loan?

A mortgage prepayment penalty is a fee that some lenders charge when you pay all or part of your mortgage loan term off early. The penalty fee is an incentive for borrowers to pay back their principal slowly over a full term, allowing mortgage lenders to collect interest.

Can I prepay my home loan with some extra money?

Yes, definitely you can prepay your home loan if you have some extra money with you. It is always recommended to repay your home loan as early as possible. You can opt for either a short term loan or a long term loan. A home loan is generally a long term loan.

Should you make pre-payments on your home loan when rates fall?

For instance, when rates fall, you get the ideal opportunity to make pre-payments, because, at a lower rate, your pre-payments will have a higher impact on reducing your long-term interest. Let’s understand this with an example: Let’s say you have taken a floating rate home loan of Rs 35 lakh at an interest rate of 8.50\% for 20 years.

Is it better to invest money or prepay a loan?

Industry experts say, investing money or prepaying a loan/loans depends on the choice of investors. There is no denying the fact that currently home loan interest rates are the lowest in a very long time.

Should you prepay your home loan or reduce the tenure?

So, while prepaying a home loan, one also needs to decide whether to reduce the monthly EMI or to reduce the remaining tenure of the loan. Reducing the tenure of the loan and keeping the EMI same, may be a wise approach. However, there will be a lesser amount to spend on a monthly basis, after paying the EMI.