Whenever you have the extra money, paying off your loans is often a good choice. Some people do it to reduce the total interest payable, while others do it to reduce their stress or worry.

You can prepay your loans by increasing your monthly payment, or by making lump sum repayments.

But before you do so, ensure that you set aside at least 3-6 months of emergency funds. With a buffer, you won't have to take up more loans should you need a large sum of money unexpectedly.

You can consider increasing your monthly instalment amount when your pay increases to shorten the loan repayment period. The key is to find the balance between saving on interest and easing your monthly cashflow.

If you have some cash coming your way, you can use it to make a lump sum repayment on your loans. Your annual bonuses can go a long way in reducing your loan repayment period and helping you save on interest payable in the long run.

You have an outstanding HDB home loan of $300,000 over 20 years, and the loan’s interest rate is at 2.6%.

You are considering making a $25,000 lump sum repayment and have 2 options to restructure your loan.