A home is a risk-free asset. But, it is a liability as long as you are servicing a home loan. While most want to get rid of the debt at the earliest, they don't take the trouble of calculating how much they can save by pre-paying the loan — partly or fully. Even financial institutions encourage pre-payment and have done away with the penalty on it for all floating-rate loans.
Pre-payment makes sense, especially if the property is self-occupied and the outstanding is over Rs 15 lakh. The biggest advantage of pre-paying a loan is saving on interest cost. Here’s how much you can save by pre-paying at various stages in the loan term(Click on graphic)
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