With increasing property prices and tightened budgets, home loan repayments can be a big financial burden. But what if you could reduce the amount you pay in taxes on your home loan repayments? In this article, we look at 8 of the best ways to maximize savings and reduce the amount of tax you have to pay.
Top saving tips to reduce tax on your calculated Home loan EMI
Here are some tried and tested tips to help you reduce tax on your home loan repayments:
1. Reduce loan tenure
One of the most effective ways to reduce your tax burden while repaying a home loan is to reduce the loan tenure. Shortening the loan tenure means you make larger monthly payments and finish the loan much sooner. That can help you save a substantial amount over the home loan interest rate. You can use an EMI calculator to calculate home loan EMI, different loan tenures, and their respective EMIs so that you make an informed decision.
2. Always make timely repayment of EMI
Making timely payments of your EMIs is another excellent way to save on tax when it comes to Home loan interest rate repayment. That is because the Home loan interest rate gets reduced if you make timely payments. You can calculate Home loan EMI dates to make sure that you make all your payments on time, and you can save money on interest payments.
3. Registering for the Auto-pay option can be your savior
One of the best ways to ensure timely payments is by registering for the auto-pay option. This way, you do not have to worry about missing payments, as the money would be automatically deducted from your account every month and credited to the loan account. This can help you save time and money as you do not have to remember to pay the EMI every month.
4. Part-payments are wise options
Part payments are also a great way to save on taxes while repaying a home loan. That means you can make additional payments and help you reduce your Home loan EMI loan tenure, and save money on the Home loan interest rate. That can be beneficial in the long run and help you to reduce the overall tax burden.
5. Consider loan transfer
You can also consider transferring your loan from one lender to another if you find a lender who is offering a better Home loan interest rate. That can help you save a lot of money in terms of interest payments as you would be paying a lower rate of interest.
6. Calculate Home Loan EMI
The most crucial step in reducing your tax burden is to calculate Home loan EMI. To calculate Home loan EMI, you will need to consider factors such as the amount of the loan, the Home loan interest rate, and the loan tenure. Once you have these details, you can use a Home Loan EMI calculator to reach an approximate EMI amount.
7. Additional EMI Payment
If you calculate Home loan EMI, try to make additional payments above your EMI. That will help reduce your loan tenure and lower your overall interest outgo. You can also look into options such as a partial prepayment or an EMI holiday if you find yourself in a situation where you can’t afford the additional payments.
8. Go for Debt Consolidation
Debt consolidation is a way to consolidate all your debts into one loan. This loan usually comes with a lower home loan interest rate and longer repayment tenure. That can help bring down your total loan amount and also help you pay off the loan faster.
Maximizing savings on home loan EMI repayment is possible with proper planning and research. By understanding the various tax deductions and benefits available, homeowners can reduce the amount of taxes they owe and increase the amount of money they keep. Taking advantage of things like switching to MCLR and making a higher down payment can also help maximize savings.