Partial-prepayment

The decision to make a partial payment of the loan will leave you with two options: To reduce EMIs or bring down home loan tenure. The option you chose will depend on your disposable income meaning how much can you prepay without it leaving you financially vulnerable.

If you make a lumpsum amount payment to an extent of the home loan and choose to reduce your home loan tenure for say 5 years, you will save on interest for the period of 5 years which will be huge load lifted off you.

On the other hand, if you choose to keep the tenure same and reduce the extent of EMI, it will reduce your monthly burden, which will compensate for the disposable income that you spent on prepayment. It will however not reduce the interest burden to a great extent due to the possibility of a future interest rate hikes.

Home loan balance transfer

If you do not have any lumpsum disposable income at hand. Opt for a home loan balance transfer to a bank that lends at a cheaper rate. This way your EMIs will be reduced and you will not have to drain your savings or break your investments for it.

Consider investments with high return rates

While it is not practical to break investments made for certain financial goals, you can, however, consider high yielding asset classes that will help you in making partial prepayments towards the home loan.

Either you can strategically put your money in instruments that will beat the interest rates that you are meant to pay on your loan to reduce the blow from the increased rates, or invest the money you were going to make a prepayment with to fund your EMIs.

Further, it is important to not break your emergency fund for home loan payments. It could leave you vulnerable to any future unexpected events.