Planning to take home loan? 5 smart ways to maximise your benefits

As seen in the example, extending the tenure from 15 years to 25 years reduces the EMI by around ₹18,000, but increases the interest outgo by nearly ₹60 lakh. Therefore, borrowers should strike a balance between affordability and total interest cost.

A practical strategy is to choose a comfortable tenure initially but prepay the loan whenever surplus funds are available. Even small prepayments in the early years can significantly reduce the total interest burden.

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3. Do you need a co-borrower?

Many borrowers choose to add a co-borrower—typically a spouse, parent, or sibling—while taking a home loan. This can offer several advantages. The biggest benefit is higher loan eligibility, as the lender considers the combined income of both borrowers. This can help buyers purchase a better property or reduce the EMI burden.

Another advantage is tax benefits. If both borrowers are co-owners of the property and are repaying the loan, each can claim tax deductions under applicable income tax provisions on principal repayment and interest payments.

However, there are some considerations as well. A co-borrower shares the responsibility of loan repayment, which means their credit profile is also linked to the loan. If EMIs are missed, it affects the credit scores of both borrowers. Additionally, financial commitments of both individuals become interconnected, which may complicate future borrowing decisions.

Therefore, while having a co-borrower can improve loan eligibility and tax efficiency, borrowers should carefully evaluate financial compatibility and long-term commitments.

4. Shop for your loan

Just as buyers compare prices before purchasing a product, they should also compare home loan offers from different lenders. Interest rates, processing fees, prepayment charges, and loan terms can vary significantly between banks and housing finance companies.

Even a small difference in interest rate—say 0.5% or 50 basis points—can result in substantial savings over a long tenure. For example, on a ₹75 lakh loan for 20 years, a 0.5% lower interest rate can save several lakhs of rupees over the loan tenure.

Borrowers should also compare factors such as fixed versus floating interest rate options, processing and administrative charges, flexibility for prepayment or foreclosure, and the lender’s customer service and digital loan management, as taking the time to evaluate these aspects can help secure better loan terms and reduce overall borrowing costs.

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5. The responsibility of a loan

A home loan is not just a financial product—it is a long-term responsibility. Missing EMIs can have serious consequences. It can lead to penalty charges, higher interest costs, and a negative impact on your credit score. A poor credit score can make it difficult to obtain future loans or credit cards.

In extreme cases, prolonged default may lead to legal action or even repossession of the property by the lender.

To avoid such situations, borrowers should maintain an emergency fund covering at least 6–12 months of EMIs, opt for EMI auto-debit to prevent missed payments, avoid taking multiple large loans simultaneously, and inform the lender early if they face temporary financial difficulties, as responsible borrowing ensures financial stability and peace of mind throughout the loan tenure.