Home Loan Calculator: How one can save Rs 32.42 lakh on Rs 60 lakh, 30-year loan with 1 additional EMI every year; see calculations
Home Loan EMI Calculator: On a Rs 60 lakh home loan at a 9.5 per cent interest rate for 30 years, the estimated EMI will be Rs 50,451, estimated interest will be Rs 1,21,62,451, and the estimated repayment amount will be Rs 1,81,62,451.
Home Loan Calculator: Real estate gets expensive with time. The cost of land, construction material, and labour cost gets higher, and the price of residential homes also rises with that. The demand and supply is another major factor in the real estate price rise. Due to these reasons, purchasing a home gets costlier for a person. Many people think that if they delay their decision of buying a home, it gets more expensive with time, and their income doesn't increase in that proportion, they may miss out on the opportunity to buy a home. So, a lot of them opt for a home loan to achieve that goal. But home loans are large amounts and are taken for durations up to 30 years. So, one often ends up paying higher interest than the principal amount on these loans. The interest amount is often higher than the principal. But the interest amount can be considerably cut. One of those ways can be to pay an additional EMI every year. In this write-up, we will discuss how that option can help reduce the home loan interest amount.
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Home loan conditions
We are taking the example of a Rs 60 lakh home loan. The interest rate will be 9.50 per cent and the loan duration will be 30 years.
What will be EMI?
The estimated equated monthly instalment (EMI) on this loan will be Rs 50,451.
How much interest one will pay
On the loan, the estimated interest will be Rs 1,21,62,451, and the estimated repayment amount will be Rs 1,81,62,451.
Options to reduce interest
There can be many options to reduce the interest amount, such as prepayment and paying additional EMI every year. We will take the second option.
What will be the strategy?
Here, one needs to make an additional EMI from the 3rd year of the loan. E.g., if the home loan EMI is starting from October 2024, the additional EMI will start from November 2027. From there onwards till the end of the loan, one needs to make an additional EMI every year.
How much interest will it save?
The interest amount on the Rs 60 lakh loan will be reduced from estimated Rs 1,21,62,451 to Rs 89,20,333. So, one will save estimated Rs 32,42,118.
How much time will be saved?
The duration of the loan will be reduced from 30 years to 23 years, so one will save 7 years.
Disclaimer
(Our calculations are projections and are not advice. Please do your due diligence or consult an expert for financial planning.)