(BloombergQuint)

BQPortfolio: How Swapnil Mani Can Prepay His 25-Year Home Loan In Five Years

BQPortfolio speaks to citizens from across India about their financial goals and helps them access expert advice on how to achieve them.

Swapnil Mani has only one thing on mind when it comes to his finances. He wants to repay his home loan as quickly as possible.

The Nashik resident borrowed Rs 30 lakh about a year ago to buy a house. He has another 24 years to pay back. But his primary objective is to prepay the loan as quickly as possible to reduce the interest he pays.

Mani earns about Rs 9 lakh a year. His expenses, including the equated monthly instalments, run up to Rs 6 lakh. With the available surplus, he has the capacity to dramatically reduce the time taken to repay the loan. Mani has also got an ace up his sleeve—a gift of Rs 10 lakh from his mother.

On this episode of BQPortfolio, Arvind Rao, founder of Arvind Rao & Associates, advises Mani to use the entire Rs 10 lakh to prepay the loan. He also devises a strategy for him to repay the entire loan within the next four years, what he calls the “golden period” for prepaying a home loan.

Typically, it’s difficult for homebuyers in cities like Mumbai and Delhi to prepay loans because of larger ticket prices. But Rao says it’s always a good idea to pay back a home loan as quickly as possible.

Watch the full episode here: