![](http://2.bp.blogspot.com/-oTccKLut0_0/VKyh_YE5PNI/AAAAAAAAB5o/RCybdI_RzVk/s1600/holding-money-back-home-loan-save.jpg)
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.
![](http://1.bp.blogspot.com/-00TNSFfHg-I/VKEFRkPdniI/AAAAAAAAB5E/p1ec6jijmGs/s1600/Interest_Rate_EMI_Home_Loan_Tenure_Principal_Calulation_20_years.png)
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.
0 comments:
Post a Comment