Should I repay my Home Loan?

All the loans are typically front-loaded. Most of the interest of the entire loan is taken in the first half of the loan period. So if you’re towards fag end of the loan, do not prepay.
The net interest rate comes out lower if you have possession of the house due to tax benefits on interest. So 8.5% loan costs about 6% for a person in 30% tax slab. Mathematically, better not to prepay.
But you pay a large interest over time. For a 50 Lakh, 15 years, 8.5% interest loan, you pay Rs 38.62L interest. Tax benefit on this loan is 0-11.58L in 15 years depending on your tax slab. In 30% slab, you pay an additional 27L to get this tax benefit of 11.58L. Think about it!
And don’t forget the psychological burden of having a large loan to pay especially if you’re retiring soon.


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