1.All the debts should be evaluated on the basis of the interest you are paying and start with repaying the costliest ones.
2. Therefore, the Credit Card balance and Personal loans should be the first ones to be prepaid as they are the costliest.
3. After all, a home loan is still considered a low-cost good debt as it helps you build an asset, along with tax benefits (for built property, not land) even if discriminatory to other assets today.
4. Also, you should consider the returns from relatively safe investments such as bank fixed deposits and bonds while doing this exercise, and considering tax benefits as per your tax bracket.
5. The future cash flow requirement is another thing to consider when prepaying your home loan, as it is always better to keep some extra money in hand for contingencies.
6. An additional tip - prepaying a home loan can be more beneficial if you opt to reduce the tenure instead of reducing the Equated Monthly Instalments.
7. A caveat - a co-owner, who is not a co-borrower, is not entitled to tax benefits; and a co-borrower, who is not a co-owner, cannot claim tax benefits.
8. Irrespective of whether or not you prepay your loan, the ultimate objective is to have a large pool of investments and no debt by the time you retire.
9. This is important because using the retirement corpus for loan repayment might reduce the funds meant to generate post-retirement income.
2. Therefore, the Credit Card balance and Personal loans should be the first ones to be prepaid as they are the costliest.
3. After all, a home loan is still considered a low-cost good debt as it helps you build an asset, along with tax benefits (for built property, not land) even if discriminatory to other assets today.
4. Also, you should consider the returns from relatively safe investments such as bank fixed deposits and bonds while doing this exercise, and considering tax benefits as per your tax bracket.
5. The future cash flow requirement is another thing to consider when prepaying your home loan, as it is always better to keep some extra money in hand for contingencies.
6. An additional tip - prepaying a home loan can be more beneficial if you opt to reduce the tenure instead of reducing the Equated Monthly Instalments.
7. A caveat - a co-owner, who is not a co-borrower, is not entitled to tax benefits; and a co-borrower, who is not a co-owner, cannot claim tax benefits.
8. Irrespective of whether or not you prepay your loan, the ultimate objective is to have a large pool of investments and no debt by the time you retire.
9. This is important because using the retirement corpus for loan repayment might reduce the funds meant to generate post-retirement income.