How home loan prepayment of Rs 2.50 lakh can save your Rs 12 lakh in interest on Rs 50 lakh loan
Home Loan Prepayment: If you take Rs 50 lakh home loan for 20 years at 10 per cent interest rate, your equated monthly instalment (EMI) will be Rs 48,251, the total interest will be Rs 65,80,260, and the repayment amount will be Rs 1,15,80,260.
Home Loan Prepayment: When you take a home loan, you repay the principal amount and the interest. In the initial stage of your repayment, the interest payment is much higher than your principal amount. But if you make a prepayment, it adds to your principal amount, and the interest may reduce significantly. Specially if you make a prepayment in the initial stage of your home loan, not only will your interest reduce drastically, but you can also repay your loan much earlier than the original repayment schedule. In this write-up, we will tell you how after a 5 per cent prepayment on your Rs 50 lakh, 20-year home loan, you can cut down your interest money by over Rs 12 lakh and the loan duration by 2.5 years.
Photos: Pixabay/Unsplash
(Disclaimer: These calculations are projections. If you want to make a prepayment of your home loan, do your due diligence or consult an expert).