Home Loan Calculator: How one can save over Rs 30 lakh and more than 5 years on Rs 80 lakh, 25-year loan by making this additional effort
Home Loan Calculator: If a borrower takes a home loan for a long time, it is highly likely that they pay more interest than the principal amount. If they take a Rs 60 lakh loan for 20 years at a 9.5 per cent interest rate, their estimated EMI will be Rs 55,928, the estimated interest will be Rs 74,22,689, and the estimated repayment will be Rs 1,34,22,689.
Home Loan Calculator: Most people dream of owning a home. But buying a home in one go is not easy. So, people take loans to realise their dream. Since these loans are for a long duration, the borrowers often pay higher interest than the principal amount. This takes their overall prepayment amount much higher than the property's actual cost. But there are many ways that borrowers can follow to reduce interest considerably on the loan. They can go for a higher down payment, prepayment, or additional equated monthly instalment (EMIs). In this write-up, through projections, we will tell how one additional EMI every year can help one reduce home loan interest by estimated Rs 30.30 lakh and duration by over 5 years on a Rs 80 lakh, 25-year home loan.
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Example of how home loan works
If they take a Rs 60 lakh loan for 20 years at a 9.5 per cent interest rate, their estimated EMI will be Rs 55,928, the estimated interest will be Rs 74,22,689, and the estimated repayment will be Rs 1,34,22,689. You can see here that the interest one pays on this loan will be higher than the principal.
Home loan calculation
For our home loan calculation, we are taking the example of a Rs 80 lakh home loan for 25 years. The interest rate for this loan will be 9.50 per cent.
What will be EMI for loan?
The estimated EMI for the loan will be Rs 69,896.
What will be interest and repayment?
The estimated interest on the loan will be Rs 1,29,68,720, and the estimated repayment amount will be Rs 2,09,68,720.
How will additional EMI be made?
The additional EMI will be started after the loan completes two years. If the first EMI was paid in October 2024, and the first additional EMI will be made in November 2026.
What impact will additional EMI have?
The additional EMI can reduce the interest amount by over 30 lakh as the estimated interest after paying one additional EMI every year will be Rs 99,38,390.
How much money will be saved?
The estimated amount saved thus will be Rs 30,30,330.
How much time will be saved?
The new duration of the loan will be 5 years and 2 months.
Disclaimer
(Our calculations are projections and not investment advice. Do your own due diligence or consult an expert for financial planning.)