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Tips to Reduce Existing Home Loan Tenure

Updated: June 21, 2022
Tips to Reduce Existing Home Loan Tenure

It’s not a surprise that every home loan borrower wants to keep their home loan tenure short and have the property papers transferred in their name as quickly as possible.

However, it should be noted that a home loan is the biggest liability one takes on in their lifetime and a single mistake like the wrong home loan tenure with a higher EMI amount can make things worse.

In this blog article, we will discuss how to determine the home loan tenure and tips to reduce existing home loan tenure.

How to Determine the Right Home Loan Tenure?

Selecting the right home loan tenure entirely depends on the EMI affordability. Which basically means, the amount  you can spare from your income towards EMI payments after considering all the necessary expenses. The “necessary expenses” mostly consists of existing debt obligations, including that on credit cards.

Also, there are many rules of thumb that guide you through the process of determining the right home loan tenure. For example, the 50-30-20 rule of thumb  states that 50% of your income should be used for meeting household expenses, 30% towards debt repayments, and the rest 20% should be allocated for savings and investment.

Using the above reference to the rule of thumb, you can use the home loan EMI calculator to calculate the EMI amount with ease and also explore various repayment scenarios.

Tips to Reduce Your Existing Home Loan Tenure

One of the best ways to reduce your home loan tenure is to increase the EMI amount, but doing it without considering the impact on your finances can be dangerous.

The following are the tips to reduce your existing home loan tenure without much impact on your finances.

1. Step-up EMIs:

The step-up EMI is a feature where you can increase the EMI amount at regular intervals throughout the loan tenure. For instance, you can increase the EMI amount every year as per the increase in your income level. To increase the EMI amount, you need to make an application with the lender requesting a change in the EMI amount. Once approved, the new adjusted EMI amount will start getting deducted from your bank account. This is usually covered under part payments, and is a scheme that most lenders allow, especially for salaried home borrowers.

Increasing the EMI payment by 5% annually can significantly reduce your home loan tenure.

2. Part Prepayment:

Apart from making regular EMI payments towards your home loan, part-prepayment of the outstanding loan amount helps to close the loan account before the end of the loan tenure. Use Grihashakti’s free part prepayment calculator to get an idea of how making lump sum payments has an impact on reducing home loan tenure.

Part prepayment works when you have a lump sum amount of idle money, but is not equivalent to the outstanding loan amount. Since you are making the payments towards the principal outstanding, it helps to reduce the interest cost and reduces the loan tenure.

3. Balance Transfer your Home Loan:

a href="">Balance Transfer of home loan means, paying off the existing outstanding home loan amount by taking off a new home loan from a new lender at attractive terms such as lower interest rate.

With lower interest costs on a loan, the loan tenure gets automatically reduced for the EMI that you were paying earlier. However, you should consider all the costs associated with balance transfer of the home loan before applying for home loan refinancing.

4.Restructuring your Home Loan:

During extreme situations, some lenders may allow you to lower the home loan tenure. If such a facility is available, don’t hesitate to negotiate the loan terms with your lender to reduce the EMI burden. Be on top of the policy changes by the government and the RBI to negotiate a better deal on home loan repayments.

5. Refinance at lower interest rates

If you're vigilant about market trends, you can capitalize on a significant drop in interest rates compared to your existing home loan rate by considering refinancing. Here's a breakdown:


Potential for Lower Interest Costs: Refinancing provides an opportunity to lock in lower interest rates, potentially reducing your overall interest expenses over the loan tenure.

Improved Overall Loan Terms: Besides lower interest rates, refinancing can lead to better loan terms, including reduced monthly EMIs and a potentially shorter loan tenure.


Costs Involved: Refinancing isn't free; it involves processing fees, documentation charges, and possibly other associated costs. It's essential to weigh these against the potential savings from lower interest rates.

While refinancing comes with its own set of costs, the potential long-term benefits make it a strategic move for those aiming to optimize their home loan terms in a favorable interest rate environment.

6. Regularly monitor and review your loan

Periodically reviewing your Home Loan is a proactive approach that can yield benefits over time. Here's why it's essential:


Potential for Better Loan Terms: Lenders often introduce promotions or special schemes that could lead to improved terms for your Home Loan. Staying vigilant allows you to capitalize on such opportunities, potentially reducing your loan tenure or securing a lower interest rate.

Enhanced Loan Management: Regularly monitoring your loan keeps you in control of your financial commitments. It allows you to assess your repayment progress, explore refinancing options, and make informed decisions.


Requires Time and Effort: Staying informed about market trends and lender offers demands time and effort. However, the potential benefits in terms of cost savings and improved loan terms make the investment worthwhile.

In conclusion, a proactive and informed approach to monitoring and reviewing your Home Loan can contribute to long-term financial efficiency.

Which Should be Reduced, the EMI Or the tenure?

Borrowers often grapple with the decision of whether to reduce their home loan EMI or the loan tenure. Opting for a shorter tenure can lead to faster repayment and overall interest savings, making it suitable for financially stable individuals. On the other hand, choosing to lower the EMI allows borrowers to redirect freed-up funds for investments or other profitable ventures. This strategy may be advantageous for those seeking flexibility and better returns from alternative investments.

Can Home Loan Tenor be reduced with Loan Refinancing?

By opting for loan refinancing and switching to a new lender, borrowers have the opportunity to negotiate more favorable loan terms, including a restructuring of the repayment duration. This enables individuals to align the loan terms with their specific financial goals. Lenders like SMFG India Credit provide a convenient Home Loan Balance Transfer feature, allowing borrowers to transfer their loan to a new lender and resume repayments on more favorable terms. The process is streamlined and swift, with minimal delays, ensuring a quick and efficient loan refinancing experience. To take advantage of these benefits, interested individuals can apply online by providing basic details.


Reducing your home loan tenure significantly reduces your interest cost and the homeownership cost. But, before making any changes to your EMI payment structure, you should study the impact on your finances, credit score, and whether you can pay the increased EMI amount consistently till the end of the loan tenure.

If you are unsure, it’s better to continue with low home loan EMI and make part prepayments, as and when you have the lump sum amount of idle money.


Can I reduce the home loan tenor through the same lender?

Certainly, it is possible to reduce the home loan term through the same lender. By discussing your financial situation and goals with the lender, you may be able to negotiate a revised loan term that better suits your needs. Additionally, a home loan balance transfer to another lender is another option to explore, as it allows you to potentially secure more favorable terms, including a shorter tenor.

Can I reduce my home loan tenor through a Home Loan Balance Transfer?

Yes, you can potentially reduce your home loan term through a home loan balance transfer. When you opt for a balance transfer, you are essentially moving your outstanding home loan from your current lender to a new lender offering better terms. During this process, you have the opportunity to negotiate a shorter loan term with the new lender, which can lead to quicker loan repayment.

Can tenure be changed in home loan?

Yes, the tenure of a home loan can be changed under certain conditions. Some lenders offer the flexibility to increase or decrease the loan tenure based on the borrower's financial situation. However, this may be subject to approval and certain terms and conditions.

What is the best tenure for a home loan?

The best tenure for a home loan depends on individual financial goals and circumstances. A shorter tenure results in higher EMIs but lower overall interest payments, while a longer tenure reduces monthly EMIs but increases the total interest paid. Borrowers should choose a tenure that aligns with their repayment capacity and financial objectives.

Can we repay the home loan early?

Yes, borrowers can choose to repay their home loan early, either through prepayment or foreclosure. Foreclosure entails repaying the entire outstanding amount before the scheduled tenure ends.

How do I close my housing loan?

Closing a housing loan involves repaying the entire outstanding amount. This can be done through foreclosure, where the borrower pays the remaining principal along with any applicable charges. The lender issues a loan closure certificate once the full repayment is made.

How can I clear my 15 lakh home loan debt?

Clearing a 15 lakh home loan debt can be achieved through regular EMIs, prepayments, or foreclosure. Increasing EMI amounts or making occasional lump-sum prepayments can expedite the repayment process.

How to pay a 20 year home loan in 10 years?

Paying off a 20-year home loan in 10 years requires higher EMIs or regular prepayments. It's essential to assess financial capability and choose an EMI that accelerates repayment without causing financial strain.

What happens if I pay 1 EMI extra every year on an existing home loan?

Paying one extra EMI every year can significantly reduce the loan tenure and interest paid. This additional payment goes directly towards the principal, accelerating loan repayment and saving on interest costs.

Disclaimer: *Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG Grihashakti. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG Grihashakti’s policy at the time of loan application. If you wish to know more about our products and services, please contact us.

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