Home Loan Calculator: When applying for a mortgage loan, how does it work? You pay a down payment, take out a large loan amount, which can be for 20 years or more, and pay a high interest rate on the principal. But in the home loan space, the repayment amount is so high that it considerably eats into your monthly savings.
However, there are effective ways to reduce the interest amount and save your hard-earned money.
They are an additional down payment, an additional EMI, an advance payment or a parallel investment to cover the interest amount.
In this article, know how with an additional 10 per cent down payment, one can save Rs 20 lakh on a Rs 75 lakh property.
Mortgage loan calculation conditions
We will take the example of a Rs 75 lakh property.
The interest rate will be 9.50 percent. The duration of the loan will be 25 years.
The down payment to purchase this property will be 15 percent and the processing fee will be 3 percent.
We will show the impact of increasing the down payment by 5 percent and 10 percent, respectively.
What will be the down payment, processing fee, and loan amount?
The estimated down payment will be Rs 11,25,000, the estimated processing fee will be Rs 1,91,250 and the estimated loan amount will be Rs 63,75,000.
What will be the EMI and interest on a loan of Rs 63,75,000?
At an interest rate of 9.5 per cent, the estimated equivalent monthly installment (EMI) will be Rs 55,698, the estimated interest will be Rs 1,03,34,449 and the estimated repayment will be Rs 1,67,09,449.
What will we do?
Instead of opting for a 15 percent down payment, we’ll opt for a 20 percent down payment.
It means that instead of asking for an estimated down payment of Rs 11,25,000, we will go for an estimated down payment of Rs 15,000,000.
It will reduce the loan processing fee to an estimated Rs 1,80,000 from Rs 1,91,250, a saving of Rs 11,250.
It will reduce the loan amount from an estimated Rs 63,75,000 to an estimated Rs 60 lakh.
What will be the new EMIs and interest on the loan of Rs 60,000,000?
The new estimated EMI will be Rs 52,422, the estimated interest amount will be Rs 97,26,540 and the estimated repayment will be Rs 1,57,26,540.
How much money will you save?
The estimated savings after making an additional 5 percent down payment will be Rs 9,94,159.
What if one opts for an additional 10 percent down payment?
The estimated down payment will be Rs 18,75,000, the estimated loan amount will be Rs 56,25,000 and the estimated processing fee will be Rs 1,68,750, which is Rs 22,500 less than when the down payment was 15 percent of the value of the property. .
What will be the EMI, interest amount and repayment?
For a loan of Rs 56,25,000, the estimated EMI will be Rs 49,145, the estimated interest will be Rs 91,18,631 and the estimated repayment will be Rs 1,47,43,631.
How much money will you save?
If you opt for a down payment of 25 per cent instead of 15 per cent, the estimated money saved will be Rs 19,88,318.
(Disclaimer: Our calculations are not investment advice. Please do your due diligence or consult an expert for financial planning.)
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