Small changes in how you repay your loan can make a big difference. For example, if you take a loan of Rs 70 lakh at a 9.50 per cent interest rate for 30 years, opting for a shorter duration and also increasing your EMI slightly can save you almost Rs 28 lakh in interest. While this small increase might not seem like much, it can greatly reduce the interest you pay. By choosing a slightly higher EMI, you can pay off the loan faster and save a lot of money in the long run. Let’s find out how this works and why it’s a smart way to manage your home loan repayment.
What is home loan?
A home loan is a loan that makes it possible for people to fulfill their dream of owning a house. These loans are offered by banks, financial institutions, and non-banking companies and are repaid through monthly EMIs.
What are the benefits of home loans?
- You can pay for a property in installments instead of making a lump sum payment
- You can claim tax deductions on your home loan interest and principal payments
- Home loan makes it affordable to buy a home
Home loan calculation conditions
We are calculating on Rs 70 lakh home loan at a 9.5 per cent interest rate for 30 years.
What will be your EMI on Rs 70 lakh loan for 30 years?
On a Rs 70 lakh loan for 30 years at a 9.50 interest rate, the estimated monthly EMI amount will be Rs 58,860.
What will be your total interest on Rs 70 lakh loan in 30 years?
The estimated total interest in 30 years will be Rs 1,41,89,526 on a Rs 70 lakh loan.
What will be your total repayment amount on Rs 70 lakh loan in 30 years?
The total estimated repayment amount will be Rs 2,11,89,526.
Reduce home loan tenure: What will be your EMI on Rs 70 lakh loan in 25 years?
If you reduce your home loan tenure to 25 from 30 years then on a Rs 70 lakh loan at a 9.50 interest rate, the estimated monthly EMI will be Rs 61,159.
What will be your total interest on Rs 70 lakh loan in 25 years?
The total estimated interest in 25 years will be Rs 1,13,47,630 on Rs 70 lakh loan.
What will be your total repayment amount on Rs 70 lakh loan in 25 years?
The total estimated repayment amount will be Rs 1,83,47,630.
How much money you will save?
The estimated amount saved because of an increase in EMI will be Rs 28,41,896.
On the other hand, the time saved will be 5 years.
(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
