Why Prepaying Your Home Loan Is The Best Option
It has been some time since you bought your house and you are eager to make some changes in it. Your equated monthly installment (EMI) burden does not look that wearisome anymore as your income has increased. You want to buy a bigger screen L.E.D. this Christmas. You also want to set up a library in your study. Your wife, on the other hand, is insisting on setting up a modular kitchen. She would also like a new dining table; the old one is outdated. While the two of you consider and reconsider the options available, your teenage son makes a better suggestion. How about prepaying the loan?
Your knee-jerk reaction is to dismiss the boy's suggestion with a careless laugh. Don't we have our entire life to repay the home loan, is your response, and nothing more is said. However, prepaying your home loan is one of the smartest financial decision you could take. If you prepay a part of the loan amount, you may have a reduced monthly burden or the number of years during which you will be under debt could be cut down by the bank. The first option lets you increase your monthly savings while the second gives a huge mental freedom. Being under debt is not a good feeling after all, and no amount of tax deductions help you overcome the feeling of being financially tied.
You have your wife's support to go for the first option. She is having a hard time managing the monthly expenses; she can still do with the old kitchen and the old dining table. You, on the other hand, want to go for the second option; a smaller TV is not that bad either. Your library plans can also be put on hold. Where is the time to read, anyway? The loan is in your name and so is the mental pressure. All of a sudden, the plans of buying a big TV and fixing an Italian modular kitchen vanish into thin air. The debate is now on which way to go on while you prepay the loan.
You thank your son for the brilliant suggestion while all he has to say is, “good sense prevailed”.