Home Loan Interest Calculation:When you leave home and shift to another city for job, one of the requirements is to buy your own house. Living on rent leads to problems in changing houses every day, due to which the desire to buy one’s own house increases. However, most of the working people fulfill their dream only by taking home loan. But have you thought how expensive it is for you to buy a house by taking a loan? If you calculate this beforehand and plan the loan thoughtfully, you can save a good amount of money, which you have to pay to the bank in the form of interest if you do not plan properly.
In today’s era, if a middle class family wants to buy a flat in a metro city, it is common to take a loan of Rs 25 lakh to 40 lakh. If we look at the interest rate of different banks, it is on average 9 percent per annum (Home Loan Interest rate)Is around. In such a situation, if you keep the loan tenure for 20 years, then you are paying even more interest on the loan taken from the bank. That means the value of the loan will be more than double to you (Home Loan Payment)It falls. This can be understood with a calculation.
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More interest than the loan value
Suppose you need to take a loan of Rs 25 lakh from the bank to buy a house. You are taking this loan for 20 years. As of now, the interest charged by SBI on home loan is around 9 percent. We have done calculations on this basis.
Home loan amount Rs 25 lakh
Interest Rate: 9.00%
Loan tenure: 20 years
EMI: Rs 22,493
Total interest: Rs 28,98,356
Total payment to the bank against loan: Rs 53,98,356
Home loan amount Rs 30 lakh
Interest Rate: 9.00%
Loan tenure: 20 years
EMI: Rs 26,992
Total interest: Rs 34,78,027
Total payment to the bank against loan: Rs 64,78,027
Home loan amount Rs 40 lakh
Interest Rate: 9.00%
Loan tenure: 20 years
EMI: Rs 35,989
Total interest: Rs 46,37,369
Total payment to the bank against loan: Rs 86,37,369
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Double has to be paid in exchange for the principal amount
It is clear from the calculation that if you have taken a loan of Rs 25 lakh for 20 years, then in 20 years you have to pay an interest of Rs 28,98,356. That means you took Rs 25 lakh from the bank, but after adding interest you have to pay around Rs 53,98,356. This is more than double the loan amount. Therefore, before taking a loan, you should have proper financial planning.
Be careful if you want to take a home loan
- Check the home loan rates of different banks and choose the best deal. If interest rates increase during the loan tenure, choose the option of refinance at a lower interest rate.
- In an era of rising interest rates, choosing a fixed-rate home loan is the right option. With a fixed rate mortgage, your interest rate will remain the same throughout the tenure of the loan.
- In order to get low EMI, do not keep the loan duration too long. The longer the duration, the more interest you have to pay.
- If you are in a position to make higher down payment then do so. This will reduce the interest paid on the loan.