Follow this in First 4 years to Reduce Home Loan Tenure
Paying off your home loan early can save you lakhs in interest and give you financial freedom much sooner. If you’re wondering how to reduce your home loan tenure from 20 years to 10 years, this guide is for you.
Whether you’re a salaried employee, government worker, or self-employed — the strategies shared here will help you close your loan faster without compromising your lifestyle.
Table of Contents
Quick Overview: Why Reduce Tenure?
| ✅ Benefit | 💰 How It Helps |
|---|---|
| Save lakhs in interest | Reduce total interest by 40–60% |
| Become debt-free 10 years early | More peace of mind and flexibility |
| Build wealth faster | Start investing earlier |
| Improve credit score | Less debt → Better financial health |
1. Start with Higher EMIs from Day One
If you can afford it, opt for EMIs higher than the minimum required. Even a ₹2,000 increase in EMI can reduce your loan tenure significantly.
Example: For a ₹30 lakh loan @ 8.5% interest
– Tenure with ₹25,000 EMI = 20 years
– Tenure with ₹30,000 EMI = ~14 years
– Tenure with ₹35,000 EMI = ~11.5 years
Use our free EMI calculator to visualize your savings.
2. Make Annual Lump Sum Prepayments
Got a bonus, incentives, or extra income? Don’t spend it all. Use a part of it to make lump sum prepayments towards the loan principal every year.
Just ₹1–2 lakh every year can reduce your home loan by 5–7 years.
✅ Pro Tip: Most banks allow unlimited prepayments without penalty if you are on a floating interest rate.
3. Switch from Monthly to Bi-Weekly Payments
If your bank allows it, pay half of your EMI every 15 days instead of once a month. This means you’ll make 26 payments in a year instead of 12, resulting in one extra EMI per year.
Over time, this strategy can reduce your loan tenure by 4–6 years.
4. Increase EMI After Every Salary Hike
As your income grows, increase your EMI in proportion. This is called the “step-up repayment method.”
Example: Increase EMI by ₹1,000–₹2,000 every year.
You won’t feel the pinch, but you’ll save years off your loan.
5. Refinance or Balance Transfer to Lower Interest
If your loan interest is high (8.5%+), consider a home loan balance transfer to a different bank offering lower rates (e.g., 7.5%).
Even a 1% drop can save you ₹3–5 lakh and reduce your loan tenure by 2–4 years.
Make sure to check processing fees, hidden charges, and eligibility before switching.
6. Avoid Loan Holidays or EMI Pauses
Many people opt for EMI holidays during tough times. But this increases your loan tenure and total interest.
✅ Instead, build a 6-month emergency fund to continue EMIs without delay during uncertain periods.
7. Use a Home Loan Prepayment Calculator
Use a calculator like this Home Loan Prepayment Calculator to test different scenarios:
- What happens if I pay ₹1 lakh extra every year?
- How will my EMI change if I reduce tenure?
- Should I reduce EMI or tenure while prepaying?
We’re also building a free CashVanto calculator to help you make smart, personalized decisions.
Best Strategy to Follow (Example Plan)
| Year | Action Taken | Result |
|---|---|---|
| Year 1 | Start with ₹5,000 extra EMI | Save ~2 years |
| Year 2 | Bonus ₹1.5 lakh used for prepayment | Save 1.5 more years |
| Year 3 | Switch to bank with 1% lower interest | Save ₹2.5 lakh + 1 more year |
| Year 4 | Increase EMI after salary hike | Save 1.5 years |
Loan closed in 10 years instead of 20!
Final Thoughts: Be Intentional, Be Consistent
Reducing your home loan tenure is not about big money moves — it’s about consistency, discipline, and using your extra money smartly.
Every prepayment counts. Every EMI increase matters. You’ll not only be debt-free faster but also unlock a decade of financial freedom.
Frequently Asked Questions
Can we decrease home loan tenure?
Yes, you can reduce your home loan tenure by either making lump sum prepayments, increasing your EMI, or refinancing your loan to a shorter term. Most banks allow tenure reduction without penalties, especially if you’re on a floating interest rate.
Reducing the tenure helps you save lakhs in interest and become debt-free faster.
How to ask a bank to reduce the tenure of a home loan?
To request a tenure reduction:
Contact your loan officer or visit your bank branch.
Submit a written request or apply through your bank’s net banking or loan portal.
Choose to increase your EMI or use a lump sum prepayment and specify that you want the tenure reduced (not EMI lowered).
Get a revised amortization schedule from the bank for clarity.
Always clarify whether the prepayment will reduce EMI or tenure — ask to reduce tenure for maximum savings.
How can I reduce the number of years on my home loan?
Here are 5 proven ways to reduce your home loan years:
Start with a higher EMI from the beginning.
Make annual lump sum prepayments using bonuses or extra income.
Increase your EMI every year after a salary hike.
Refinance or balance transfer to a lower interest rate and reduce the term.
Switch to bi-weekly payments, which results in one extra EMI per year.
These steps can help you close a 20-year loan in 10–12 years, saving significant interest in the process.
What happens if I pay 2 EMIs extra every year?
Paying 2 extra EMIs per year is a powerful strategy to reduce home loan tenure.
For a 20-year loan, just 2 extra EMIs annually can:
Reduce your loan tenure by 4 to 6 years
Save you ₹5–10 lakhs in interest (depending on loan size and rate)
Help you become debt-free much earlier
It’s a simple yet smart way to accelerate your loan repayment without affecting your monthly budget much.
How to reduce home loan tenure by increasing EMI calculator?
You can reduce your home loan tenure by increasing your monthly EMI — and we’ve made it easy for you to calculate exactly how much time and interest you’ll save.
👉 Use our EMI Increase Tenure Reduction Calculator on the Cashvanto website. Just enter your loan amount, current EMI, interest rate, and the new EMI you want to pay. The calculator will instantly show:
🔻 New reduced loan tenure (in months/years)
💰 Total interest saved
⏱ Time saved compared to your original plan
This tool helps you plan early loan closure without the guesswork. Even a small EMI increase can save lakhs in interest and years of repayment.
✅ Try the calculator now and take control of your home loan!
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