4 Ways Millennials Can Plan Their Home Loan Repayment

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4 Ways Millennials Can Plan Their Home Loan Repayment

It has been widely touted that 24-25 years is increasingly becoming the average age at which Indians are becoming homeowners today. That means millennials are at the forefront of home purchases today. In order to do so, more and more millennials are taking home loans. Thanks to the rise of fintech applications and easy access to hassle-free home purchase finance, they are able to afford everything from purchasing luxury 3 BHK flats in Mumbai for the entire family to constructing their dream residential property. So, what gives millennials the edge? The right age. Being in their 20s and early 30s means millennials are already working or in business, and their earning potential will only grow exponentially. This spells good news for lenders and financial institutions as they can be confident in the ability of millennial applicants to pay off huge home loans.


While the financial picture might look all rosy for millennial homeowners, paying off long-term home loans will not be possible without adequate planning. Since home loans tend to be very long commitments, one needs a lot of planning and discipline to pay off EMIs responsibly. Let us decode how millennials can plan their home loan repayment smartly using the following four ways: 1. Plan and control your expenditure Home loan EMIs can run for as long as 15-30 years - this is a very long time during which your earnings and income are expected to grow, and so are the expenditures and inflation. You must consider potential marriage, children, renovation, medical, travel, lifestyle, and other emergency expenses. Thus, to ensure hassle-free home loan repayment, your EMI figure should be fixed at an amount you are comfortable paying in the long run. You should also curb your expenditure accordingly. As per your current financial ability, you can opt for step-up or step-down home loans where the EMI either increases or decreases with tenure. Additionally, don’t let your total EMIs exceed 40-50% of your income. 2. Make a higher home loan down payment If you are about to take up a home loan, make sure to pay a higher down payment to the best of your abilities. Typically, banks finance up to 75-90% of your home loan amount. The rest has to be paid upfront. By paying a larger down payment, you would be able to bring down the total loan amount. This, in turn, will reduce the interest you have to pay in the long run, resulting in more relaxed EMIs and shorter tenures. 3. Make regular prepayments to pay off your loan quicker A good strategy to pay off your home loan amount is to do it as quickly as possible. Remember, the longer your home loan amount period, the exponentially higher its interest component. For home loans as long as 30 years of tenure, millennials can end up paying more than double the cost of their home! Thus, you should plan to make regular prepayments above and beyond the regular EMI, especially if you receive some bonus or accrue some savings. This can reduce the number of EMIs to be paid and save you money in your middle-aged years. 4. Consider a home loan balance transfer to obtain better interest rates Lastly, opt for a home loan balance transfer if you find another lender offering you a lower interest rate or better terms. The home loan transfer from your existing lender to a new one is seamless and swift, and you will be able to make your home loan repayment much more affordable. By sticking to the strategies mentioned above, you, as a millennial, can breeze through your home loan – no matter how huge it is. If you already know how to control your spending, invest and save smartly, and have planned how to pay off home loan EMIs quicker, then no property should be out of your reach.


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