Repay Home Loans in India without stressing your wallet


A lot of people buy their dream home with the help of some finance from Bank or Financial institue (home loan). Typically 80% people who opt for a home loan, end up paying almost double the amount as compared to the total home loan value. For example, if you have a home loan of amount 20,00,000 or 20 Lakh for a tenure of 20 years at 10.15% interest rate, then your EMI (Equated Monthly Installment) will be 19,500. If you continue paying the same amount for 20 years, total amount paid to the bank is approx. ₹ 46,50,000 or ₹ 46.5 Lakh ( more than double the loan amount ). Below is the screenshot with all the necessary details and analysis.



Lets focus on ways to reduce this value of "Total Interest Payable"

Repay more as Income increases ...
Its simple, even a small 5% increase in the EMI every year can reduce your home loan tenure by 8 years. The borrower should increase the EMI paid to the bank by ₹ 1000 every year.  Below is the chart:

Year EMI(₹) Remaining Tenure
1 20,644 20 years
2 21,676 16.5
3 22,760 13
4 23,898 11
5 25,093 9
6 26,347 7.5
7 27,665 6
8 29,048 4.8
9 30,500 3.5
10 32,025 2.5
11 33,627 1.5
12 35,308 Loan ends

Other ways to repay home loans:

1. Increase EMI by 2% every year and the tenure will be reduce by 5 years.
2. Increase EMI by 10% every year and the tenure will be reduced by 10 years.

Note: RBI does not allow banks to levy a pre-payment penalty on housing loans with floating rate interest, but many banks do so for fixed rate interest on home loans.

2 comments: Leave Your Comments

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  2. “What was home, really? Just a place to lay your head.
    No. It was so much more than that. It was a place where a person belonged. Where a fellow would be missed. It was a part of a man. Something that couldn't be sold or taken for granted.”
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