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Home loan part-payment benefits and uses

Nothing compares to the pride and happiness you experience when you purchase your first house. Home loans are typically necessary for first-time homebuyers to realize their ambition. Dealing with the monthly installment payments follows. Most home loan borrowers experience occasional exhaustion from the pressure of monthly EMIs for 2-3 decades due to their extended repayment terms.

All home loans require the borrower to make a long-term commitment. One needs to be very careful with their monthly budget during this time and reevaluate every unnecessary expense. The desire to purchase an expensive device or car must frequently be put on hold in favor of other desires. As a result, it would be quite normal to feel tempted to give in to these cravings if you had access to extra money, such yearly bonuses. However, using these cash to make partial home loan payments would undoubtedly give you greater financial freedom.

How is prepayment and part payment different?

When a borrower makes a partial payment on a home, he or she decides to put some money toward the principal that is less than the entire amount still owed on the loan. This usually occurs when the borrower has access to a lump sum of money, such as bonus payments, salary increases or incentives, returns from investments, etc. 

On the other hand, prepayment is distinct from part payment. Prepayment or foreclosure of the home loan occurs when the borrower chooses to pay off the entire amount of the outstanding mortgage in one go before the end of the last repayment date of his or her payment term.

Making Home Loan Part Payments in Advance:

It’s critical to comprehend whether using additional money to make part payments makes any sense at all now that you are aware of the distinctions between part-paying and prepaying your mortgage. After all, the home loan EMI calculator assisted you in making your financial plans for the following few years so that the monthly installment wouldn’t add to your financial load.

Part-paying your mortgage makes sense if you want to pay it off as quickly as possible. This can significantly reduce your home loan obligation while having no negative effects on your budget for routine monthly costs.

You can use our home loan calculator to evaluate your loan’s amortization timeline and then use the results to project the impact of partial payments.

Benefits of Home Loan Part Payments:

Provides Additional Liquidity:

When you have access to financial windfalls like an inheritance, performance bonus, or gift, you should use them to partially pay down your mortgage. Your funds will have more liquidity as a result.

More Wealth Accumulation:

Consider part-paying your mortgage if the interest rate is higher than the money you have invested in different financial instruments or if the rate of interest on your home loan is higher. You have the choice to direct your remaining assets into financial products that could provide longer-term returns at a greater rate if you are willing to sate your appetite for risk. All of this increases the work you put into wealth growth and financial planning.

Maintain A Good Credit Score:

If you took out a home loan with a variable interest rate, there is a chance that the interest will increase because of continual adjustments by the RBI and the lending partner. Your loan’s EMI or term may increase in such a situation. In these circumstances, making partial payments on your mortgage guarantees that you’ll keep your interest rate low and your credit score high.

Debt free Quickly:

The majority of your first few years’ loan repayments are devoted to paying off the interest component. As you get closer to paying off your loan in full, this turns around, with a bigger portion of the EMI going toward paying the house loan’s principle. Making significant partial payments on the mortgage during the first years of your repayment term significantly reduces the amount of interest paid. Your repayment period automatically shortens, which accelerates your debt freedom.

The Convenience of Payment:

For those who don’t want to engage in a systematic prepayment strategy that operates on a set timetable, part-payment on mortgages is a blessing. The simplicity of paying significant quantities toward your house might undoubtedly work in your favor if your loan partner accepts ad hoc payments without any fees or charges.


For home loans with lengthy payback terms, the adage “one should borrow as little as possible and repay as rapidly as feasible” holds true. You should absolutely try it out if you have additional money that can be used to pay a portion of your mortgage.

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