Home Loan: How to save Rs 26.30 lakh in interest and 4 years in tenure on Rs 75 lakh loan with prepayment
Home Loan Calculator: If you take a Rs 75 lakh home loan for 20 years at 9.50 per cent annual interest rate, your estimated equated monthly instalment (EMI) will be Rs 69,910, the estimated interest will be Rs 92,78,361, and the estimated repayment amount will be Rs 1,67,78,361.
Home Loan Calculator: It's a dream for many to have a home. But real estate properties are expensive. One needs a lot of money to buy a home. So people take a home loan to realise their dream. Home loans are large amounts with long durations. Borrowers take them for 15, 20 years, or a longer duration. Due to their long duration, the interest paid is often more than the principal amount. In such a state, a down payment or prepayment can be helpful. It adds to your principal amount and can significantly reduce your interest on the home loan. In this write-up, know how you can reduce over Rs 26 lakh on a Rs 75 lakh, 20-year home loan by prepaying 10 per cent of the loan amount (Rs 7,50,000) in 3 phases.
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(Disclaimer: These calculations are projections. Actual calculation may vary from bank to bank. Do your due diligence or consult an expert before taking home loan.)
Home loan conditions
Here, we are taking Rs 75 lakh home loan for 20 years at the interest rate of 9.50 per cent annually.
What will be your EMI?
Given the conditions above, your estimated equated monthly instalment (EMI) will be Rs 69,910.
What will be your interest and repayment amount?
Total estimated interest will be Rs 92,78,361, and the estimated repayment amount will be Rs 1,67,78,361.
What are the prepayment conditions?
Here, after competing 12 EMIs, you need to make a prepayment of Rs 2,50,000 every year for 3 cnsecutive years. If your loan starts in August 2024, you need to make a prepayment of Rs 2,50,000 in September 2025, September 2026 and Rs September 2027.
How will it impact your loan?
With prepayments of Rs 2.50 lakh each year for 3 years, your EMI will remain the same, but your estimated tenure will be reduced by 48 months.
How much will you save in interest?
The estimated that you will save in this way will be Rs 26,30,158.
What if I go for reduced EMI?
Given the same prepayment conditions, you may also go for a reduced EMI. If you keep your loan tenure as 120 months, and go for a reduced EMI, your new estimated EMI will be Rs 62,631, Rs 7,279 than earlier. But instead of Rs 26.30 lakh, the estimated interest you will save will be Rs 8,13,796.