Home Loan: Before applying for the loan, make sure to calculate the loan tenure, interest rate and EMI of different banks.
Home Loan: Home loan interest rates are currently at their record low. Most of the government and private sector banks are offering home loans at less than 7 percent interest. Looking at the current home loan interest rates, if you are planning to buy a house or a flat, this may be a better time. Before applying for a home loan, make sure to calculate the loan tenure, interest rate and EMI of different banks. One thing to note here is that if you increase the tenure of the loan, then your EMI will decrease, but the other side of this is that your interest liability will be higher.
Calculation of EMI, interest on extension of tenor by 10 years
Suppose, you apply for a home loan of Rs 30 lakh. Here the interest rate of home loan is kept at 7 percent. Now understand how much difference will be on EMI and interest liability at a difference of 10 years.
Loan Tenure: 20 Years
- Interest Rate: 7% p.a.
- EMI: 23,259
- Interest in total tenure: 25,82,153
- Total Payment: 55,82,153
Loan Tenure: 30 Years
- Interest Rate: 7% p.a.
- EMI: 19,959
- Interest on total tenure: 41,85,267
- Total Payment: 71,85,267
Saving of 16 lakhs in interest
On the basis of this calculation of home loan, you will find that there is a difference of more than Rs 16 lakh in the interest amount at the rate of 7 percent per annum interest on a loan of Rs 30 lakh with a difference of 10 years in the loan tenure. Whereas, the monthly EMI is getting reduced by about Rs 3,300. Based on this calculation, an estimate can be made regarding the loan tenure and EMI.
Home Loan: How To Decide
Home loan is a long term mortgage retail loan. The first thing to do in home loan is to assess the monthly repayment capacity. EMI should be kept the same, so that your regular monthly expenses are not affected. Here, it is clear that if you keep the loan tenure longer, the EMI will come down, but you will be liable for interest. But, the flip side of this is that if you have a long loan repayment tenure, then along with the salary growth, you should repay the lump sum amount every year at regular intervals apart from EMI. This will reduce your principal amount. Due to which your interest liability will decrease.
