Salaried? Know how using Diwali Bonus for Home Loan Prepayment helps Borrowers

financialexpress.com:

Diwali, the festival of lights, is a time of celebration and togetherness, but it also presents a unique financial opportunity in the form of Diwali bonuses. Rather than splurging on fleeting luxuries, consider channelling your Diwali bonus toward a more substantial investment – prepaying your home loan. We will explore the advantages of utilizing your Diwali bonus for home loan prepayment, along with a comprehensive explanation of tax deduction sections, interest rates, and how your interest rate percentage plays a pivotal role in this financial decision.

The Power of Home Loan Prepayment

Before delving into the intricacies of tax sections and interest rates, it is essential to understand the fundamentals of home loan prepayment and the associated benefits:

Interest Savings

Home loan prepayment entails making extra payments toward the principal amount of your loan. By reducing your outstanding principal balance, you decrease the interest component of your monthly instalments (EMIs). The more you prepay, the more you save on interest, paving the way to a quicker path to financial freedom.

Reduced Loan Tenure

Prepaying your home loan allows you to shorten the loan tenure. A shorter tenure not only means faster debt clearance but also a significant reduction in overall interest costs.

Financial Security

Becoming debt-free by prepaying your home loan provides financial security. Free from EMI obligations, you have greater financial flexibility to divert your funds toward investments, savings, and other financial goals.

Improved Credit Score

Timely home loan repayments and prepayments positively influence your credit history and bolster your credit score. A robust credit score opens doors to better financial