Paying an extra amount towards your loan principal, over and above the regular EMI. This reduces the outstanding principal and either shortens the loan tenure or reduces future EMIs. RBI prohibits prepayment penalties on floating-rate individual loans.
You pay ₹2,00,000 extra on your home loan each year. On a ₹30,00,000 loan at 8.5% for 20 years, this could save you ₹8-10 lakh in interest and reduce your tenure by 5-7 years. Best financial decision you can make.
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