A Home Loan can be of immense help in padding your budget when you plan to buy a house or property. Applying for and procuring a Home Loan is a straightforward process, and the same goes for closing the loan. You can easily pay off your Home Loan with the help of a foreclosure. To learn more about the Home Loan foreclosure process, continue reading.
What is the meaning of Home Loan foreclosure?
You generally repay a Home Loan through regular EMI payments. However, you can also pay off the amount borrowed through a foreclosure. A foreclosure is simply the closing of a Home Loan by paying off the entire amount borrowed in one lump sum amount. It is part of the regular Home Loan process and allows you to pay off the borrowed amount before the EMI schedule.
You can opt for a foreclosure even after having made a few EMI payments. To calculate the amount due, you can use the free Home Loan repayment calculators available online. You simply have to insert all required details about your Home Loan, such as the tenure, interest rate, and loan amount. Then you must provide the number of months for which you have already paid the EMI and the month of foreclosure. The month in which you decide you foreclose your loan account is known as the Foreclosure Month.
You can read more about Home Loan EMI here.
What are the factors to consider before opting for a Housing Loan foreclosure?
These are the factors you must think about before deciding to foreclose your Home Loan:
- Tax Benefits: Opting for a Home Loan allows you to claim certain tax deductions regarding principal and interest repayment under the Income Tax Act, 1961. However, when you choose to foreclose your Home Loan before the completion of the tenure, it could mean letting go of these tax benefits. Thus, evaluate and check if you can let go of the deductions or claim them elsewhere while considering a foreclosure.
- EMI payments: EMI payments are designed to reduce financial strain and help you pay off the loan amount over a period of time. However, if paying EMIs through your monthly income is leaving very little for your savings, you can consider foreclosing the loan.
- Calculate Expenses: While thinking about a foreclosure, you must consider your long-term and short-term expenses. Consider your retirement plans, children's education, contingency savings etc. Make sure you have the funds to foreclose a loan without hampering other expenses. Also, make sure to check the foreclosure charges levied by the bank or financial institution in question.
- Timing: It is essential to time the foreclosure of your Home Loan well. Use a Home Loan Repayment Calculator to understand the best time to foreclose your loan according to your savings and financial plans.
Home Loans at HDFC Bank
HDFC Bank is aware of the importance of having your own home. To help you fulfil your dreams, HDFC Bank offers Home Loans at attractive interest rates. An HDFC Bank Home Loan also comes with flexible repayment and foreclosure options. With the HDFC Bank Home Loans, your dreams of having a home of your own can become a reality.
To apply for an HDFC Bank Home Loan, click right here.
*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.
