Home loan repayment periods have lengthened due to increases in the repo rate in recent years, resulting in many borrowers facing repayment schedules that extend beyond their retirement age. Numerous existing borrowers are experiencing significant financial strain as a consequence of the prolonged duration of their loans following consecutive interest rate hikes.
A primary drawback of an extended loan tenure is the potential for increased interest payments over time. The longer the duration of the loan, the more interest accumulates, which can ultimately elevate the overall cost of borrowing. Additionally, a long-term loan may restrict your capacity to make other financial decisions and investments, potentially hindering your ability to achieve other critical objectives, such as saving for retirement.
Navigating a longer loan tenure can be difficult, particularly if it surpasses your retirement age; however, there are strategies you can employ to enhance manageability. Begin by assessing your income, expenditures, savings, and existing debt. Here are ten strategies to help manage an extended loan tenure:
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1. Assess your financial situation: Begin by evaluating your finances to identify any additional funds available each month for loan repayment.
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2. Engage with your lender: Communicate with your lender to explore options for restructuring your loan or obtaining a reduced interest rate.
3. Make partial loan payments: This involves paying a portion of the outstanding principal amount, which is less than the total due. This can be executed at any time during the loan period and may assist in alleviating your debt burden and reducing the overall cost of the loan over time. There are several benefits associated with making partial payments on your loan.
Initially, this approach can assist in decreasing the overall interest paid throughout the loan’s duration. Additionally, making partial payments may facilitate a quicker repayment of the loan.
Adhil Shetty, CEO of Bankbazaar.com,
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