Owing your bank cash may be stressful. When you have something since large as your home loan looming over you, you are lured to pay it back once you can.
But that isn’t always the most effective decision that is financial here’s what you need to know before you settle your home loan early.
Settling your house loan means less interest
The faster you pay back your house loan, the less interest you spend. Below are a few methods for you to pay down your property loan early:
Situation 1: Refinancing to a loan that is shorter-term
Refinancing means replacing your existing mortgage loan by having a brand new mortgage (through the exact exact same bank, or another one). You can switch to another home loan with a shorter loan tenure when you refinance. Here’s how different loan tenures affect your interest payments:
A reduced loan tenure means spending significantly less interest. The essential difference between a 20-year tenure and a tenure that is 25-year the scenario above, for instance, is nearly RM100,000 in interest re payments!
But that you can cope with the higher monthly instalments that come with it before you spring for a shorter tenure, you’ll need to make sure: