I have a home loan with SBI which started in 2019. The loan amount is 60 lakh and tenure is for 25 months. I am regular on my EMIs and I have approximately 50 lakh liquid in my bank account. Can you please suggest if it is beneficial to clear some of my loan amount from my liquid or do you suggest any better options?
Ans: While it is always a good idea to pay off the maximum loan amount early to save interest on your home loan, there are some things you should definitely keep in mind.
You should always have some liquid amount available handy for regular day expenses or emergencies. Once you deduct this amount, the money available can then be used to prepay your home loan. This will help you save money on interest payments.
You can choose whether to make a bulk prepayment in one go or go for smaller prepayments. From a tax perspective, you can claim exemption on monthly EMI payments which you will not be able to once you pay back your home loan. So it might be preferable to make smaller prepayments instead.