Home Loan Calculator: For a borrower who somehow manages to pay their monthly equated instalments (EMIs), every percentage point of the interest rate matters, as it increases or decreases their interest amount significantly.

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But borrowers feel the pinch more when they are on a long-tenure loan.

The reason is that the longer the loan tenure, the higher the interest amount.

In home loans, which have tenures of 15–30 years, the interest amount is most often larger than the principal amount.

Borrowers need to bargain hard with the lender to get the home loan at the lowest possible interest rate.

It will help them save a significant amount on their loan.

In this write-up, know how much interest a borrower can save on a Rs 75 lakh loan for 25 years if they get it at lower and higher rates and what will happen if the borrower invests the saved interest amount in a mutual fund SIP.

Interest on Rs 75 home loan at 10.50% interest rate for 25 years

The estimated EMI on such a loan will be Rs 70,814, the estimated interest will be Rs 1,37,44,088, and the estimated repayment will be Rs 2,12,44,088.

Interest when borrower gets same loan at 9.50 per cent interest rate

The estimated EMI will be Rs 65,527, the estimated interest will be Rs 1,21,58,175, and the estimated repayment will be Rs 1,96,58,175.

How much money will be saved?

The estimated interest saved in 25 years (300 months) will be Rs 15,85,913.

What if that amount is invested in a mutual fund SIP?

The monthly SIP investment in that will be Rs 15,85,913/300= Rs 5,287.

Corpus at 12% annualised SIP return

At 12 per cent annualised growth, estimated capital gains will be Rs 84,46,697, and the estimated corpus will be Rs 1,00,32,797. 

(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)