Home Loan Calculator: How 10% extra down payment can help save Rs 20 lakh on Rs 75 lakh property; see calculations

Home Loan Calculator: When you take a home loan, how does it work? You pay a down payment, take a high-amount loan, which can be for 20 years or more, and pay a heavy interest rate against the principal. But in the loan home span, the repayment amount is so high that it eats out your monthly savings considerably.

However, there are effective ways to reduce the interest amount and save hard-earned money.

They are extra down payment, additional EMI, prepayment, or running a parallel investment to cover the interest amount.

In this write-up, know how, going with a 10 per cent extra down payment, one can save Rs 20 lakh on a Rs 75 lakh property.  

Home loan calculation conditions

We will take the example of a Rs 75 lakh property.

The interest rate will be 9.50 per cent. The loan duration will be 25 years.

The down payment to purchase this property will be 15 per cent and the processing fee will be 3 per cent.

We will show the impact of increasing down payment by 5 per cent and 10 per cent, respectively.

What will be down payment, processing fee, and loan amount?

The estimated down payment will be Rs 11,25,000, the estimated processing fee will be Rs 1,91,250, and the estimated loan amount will be Rs 63,75,000.

What will be EMI and interest on Rs 63,75,000 loan?

At a 9.5 per cent interest rate, the estimated equated monthly instalment (EMI) will be Rs 55,698, the estimated interest will be Rs 1,03,34,449, and the estimated repayment will be Rs 1,67,09,449.

What will we do?

Instead of going for a 15 per cent down payment, we will go for a 20 per cent down payment.

It means, instead of going for an estimated Rs 11,25,000 down payment, we will go for an estimated Rs 15,00,000 down payment.

It will reduce the loan processing fee to estimated Rs 1,80,000 from Rs 1,91,250, a savings of Rs 11,250.

It will reduce the loan amount from estimated Rs 63,75,000 to estimated Rs 60 lakh.

What will be new EMI and interest on Rs 60,00,000 loan?

The new estimated EMI will be Rs 52,422, the estimated interest amount will be Rs 97,26,540, and the estimated repayment will be Rs 1,57,26,540.

How much money will it save?

The estimated saving after having a 5 per cent extra down payment will be Rs 9,94,159.

What if one goes for 10 per cent extra down payment? 

The estimated down payment will be Rs 18,75,000, the estimated loan amount will be Rs 56,25,000, and the estimated processing fee will be Rs 1,68,750, Rs 22,500 less than when the down payment was 15 per cent of the property's value.

What will be EMI, interest amount, and repayment? 

For a Rs 56,25,000 loan, the estimated EMI will be Rs 49,145, the estimated interest will be Rs 91,18,631, and the estimated repayment will be Rs 1,47,43,631. 

How much money will be saved?

If one goes for a 25 per cent down payment instead of 15 per cent, the estimated money saved will be Rs 19,88,318.

(Disclaimer: Our calculations are not investment advice. Do your due diligence or consult an expert for financial planning.)