A home loan of ₹1 crore and interest alone of ₹1.6 crore! Don’t make the mistake of buying a home without understanding this maze of banks. Before taking a home loan of ₹ 1 crore, understand every penny; The mathematics of EMI of 15, 20 and 30 years which will save you lakhs of rupees.

Having a home of one’s own is the biggest dream of every family. But in today’s times, especially in big cities, to fulfill this dream one has to take a huge home loan. When it comes to a big home loan like ₹1 crore, just looking at the price of the house or its location is not enough. You also have to understand the deep mathematics of the loan which is going to have a direct impact on your pocket every month for the next many years.

If you sign the loan agreement without thinking, you may face serious financial crunch in the future. Let us understand in very simple and practical language what is the real game of ₹ 1 crore home loan.

Exact scientific mathematics to decide EMI

Home loan monthly installment (EMI) mainly rests on three pillars: loan principal, interest rate, and loan tenure. Interest rates usually depend on your CIBIL Score and the bank’s policy. 8.5% to 9.5% Varies between.

Banks use this financial formula to calculate your EMI:

$$E = P \cdot r \cdot \frac{(1+r)^n}{(1+r)^n – 1}$$

Here:

• $E$ = Monthly Installment (EMI)

• $P$ = Total Principal Amount of Loan

• $r$ = monthly interest rate (i.e. $\frac{\text{annual rate}}{12 \cdot 100}$)

• $n$ = Total months to repay the loan (Tenure in months)

Complete accounting for 15, 20 and 30 year periods

You can easily understand how much the loan tenure affects your total payment from the table below at an assumed interest rate of 8%:

20 year account: The more you take, the same interest

If you take a loan of ₹ 1 crore for 20 years, then your monthly EMI will be ₹83,644 Will be made. This deal seems normal, but pay attention – in 20 years, you will be paying the bank nothing but the principal amount. ₹1,00,74,562 interest only Will pay as. That is, the amount of money you borrowed for the house, the bank will charge you extra in the name of interest.

30 Year Tenure: The Biggest Deception of Low EMI

Many people choose a long tenure of 30 years to keep their monthly budget light. This will reduce your monthly EMI. ₹73,376 But she comes. This seems like a savings of ₹ 10,000 per month, but if you look at the total interest, it will blow you away. In 30 years you will go to the bank More than ₹1.64 crore only interest Will give! That means, in exchange for a house worth ₹1 crore, you would have handed over a total amount of more than ₹2.64 crore to the bank.

Tenure of 15 years: A little strictness, but savings of lakhs

If your monthly income is good, then 15 years is the best option for you. In this your EMI will increase ₹95,565 It will be done, which may seem a little heavy in the beginning. But thanks to this smart decision your total interest will come down to just Rs. ₹72 lakh Will remain around. You will not only be free from debt years ago, but will also save yourself around ₹92 lakh from the clutches of the bank.

‘Golden Rule’ for deciding home budget

Financial experts believe that your total home EMI should be equal to your total monthly in-hand salary. 30% to 40% Should never be more than. If half of your salary goes directly into the loan installment, then the entire balance of children’s education, medical emergency, daily household expenses and investments for the future (like SIP or PPF) will get disturbed.

Include these hidden expenses in your budget

Most of the people while taking home loan only calculate the price of the house and EMI, which is a big mistake. Apart from this, there are many such big expenses which directly rob your pocket:

• Registry and Stamp Duty: About 5% to 7% of the price of the property goes into this.

• Interior and fittings: The cost of woodwork, paint, and electrical equipment to make a new home livable.

• Society Maintenance and Parking Charges: Fixed charges paid monthly or annually that form part of your regular budget.

Easy way out of loan trap (Pre-payment Strategy)

After taking the loan, as your income increases in future or you get a bonus in your job, instead of spending that extra money Part Pre-payment Select the option. Depositing the principal amount in advance equal to just one or two additional EMIs a year reduces your loan tenure by several years and directly saves lakhs in total interest. Instead of making home loan a burden, make it a strong foundation for your secure future with proper calculations and planning.