I'm a defence retiree. I took a Rs 11.25 lakh DDA home loan from State Bank of India in December for 193 months at 10.25 per cent interest. The EMI is Rs 11,918 . Loan is on a co-applicant. – Digamber Singh Negi

Can I prepayRs 2 lakh at a stretch and Rs 20,000 every six months as prepayment, apart from the normal EMI till completion?

Do check with your bank on what is the limit on prepayment and how frequently you can prepay. These terms could vary across banks. Once that is cleared you can go ahead and prepay your loan in intervals according to how you wish to spread it across (based on bank's terms as well) without any prepayment penalty apart from your regular EMI. This will help you close out your loan faster.

Will there be any problem later, as you mentioned once in an article that prepayment can start after third year?

There is no problem as such, its just that when you take a home loan with a bank they will specify prepayment terms which includes from when you can start prepaying and if there are limits to the prepayment amount, etc.

What will the EMI be?

According to what time frame you wish to prepay and how much you wish to prepay, you can enter the values in this easy-to-use online calculator to understand how your loan tenure will decrease and how early you will close your loan: http://www.bankbazaar.com/finance-tools/refinance-calculator.html .

Your EMI will remain the same, only the tenure will change unless you specifically request otherwise.

Shall I opt for a shorter loan tenure or reduce the EMI to save the interest? For this, shall I approach the sanctioning authority of the concerned bank?

You will save interest when loan tenure is reduced. This should happen automatically unless you specify otherwise. Nevertheless it always helps to check with the banks on how they will factor in your prepayment, which is directly deducted from the outstanding principal amount of the loan.

Or shall I approach any other agencies for lower interest rates? Please suggest any in the National Capital Region.

In the current scenario, it is likely that new borrowers will get the maximum benefits of an interest rate cut; hence it might not be a bad idea to consider a loan transfer. Compare between various banks and figure out the total cost of the loan, how much interest you will save with the loan transfer and then take a call. The online calculator will help you make an informed decision by helping you figure out how much interest you will exactly save with the loan transfer.

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