Table of Content
Within the first six months of the loan, there will be a two per cent prepayment penalty for prepaying an HDFC home loan. There will also be applicable taxes, statutory levies, and charges. HFCs cannot charge a prepayment penalty on fixed-rate loans taken by individuals, if the borrower is making repayment with own funds. Life is zero sum gain therefore if Home Loan Prepayment is beneficial for borrower so it is financial loss for Home Loan provider.
Home Loan Prepayment is financially beneficial for Home Loan Borrowers. It helps to reduce Interest burden thus overall cost of property. Any type of debt including Home Loan is not good for financial health of an individual. Average Home Loan tenure in India is 8 years which means Home Loan Prepayment is preferred by borrowers to clear off Home Loan. Normally Home Loan Prepayment is done when we receive annual bonus or any exiting investment mature. As i mentioned in my other posts also that Home Loan Interest increase the overall cost of property.
How to e-verify ITR without login to e-fling account?
To make it easy for you, here is a free excel based Home Loan EMI Calculator that also shows you the loan amortization schedule. Every month, the Interest payment for the month goes down while the principal repayment goes up. And this continues for one by one for all the months in the loan tenure. Moneyexcel blog is ranked as one of the Top 10 Personal Finance Blog in India.
Based on the values you input into the fields, you can view the new EMI to the right of the calculator post prepayment. Many salaried and self-employed individuals may have availed home loans. If the home loan has been newly availed, then the borrower may think of postponing house purchase decision and closing the loan account.
Current Home Loan Interest Rate: Apply for a Home Loan at 8.60%*
So that was how you can use the Home Loan EMI calculator India to calculate the EMI on your home loan. You can easily use this loan EMI calculator excel sheet download to calculate your home loan EMIs and create a loan amortization schedule. Do share this article with your friends who are looking for EMI Calculator or trying to get information about Home loan prepayment and closure.
The EMI calculator returns the EMI amount payable monthly over the loan tenure. The prepayment calculator returns the revised loan condition of EMI or tenure after payment of the lump-sum amount. The EMI calculator requires loan amount, tenure, and interest rate as inputs. The prepayment calculator requires loan amount, EMIs paid till the date of prepayment, prepayment amount, interest rate, and tenure of the loan. You must submit an online payment using internet banking or do what you normally do for EMIs.
Finance for Professionals
But the initial EMIs contribute more towards the interest component of the loan. And in the later years of the loan tenure, the EMIs contribute more towards repayment of the loan principal. If Mr.X is wise person like you and opts to pay 50,000 Rs/- every year towards repayment , tenure of this loan will be reduced to 12 year and net interest paid will be Rs 14.8 lakh. So actually Mr. X can save hefty Rs 11.7 lakh which can help him for building good retirement corpus or may be useful for other needs.
HFCs can charge prepayment penalty on fixed-rate loans, if the borrower is taking another loan from another bank or HFC to make the prepayment. At Grihashakti, there are no foreclosure charges applicable for part-prepayments or prepayments made towards home loans taken at floating interest rates for non-business purposes. Utilise the calculator to determine whether prepayment would be beneficial for you or not before proceeding with payment. The home loan prepayment calculator is available online and is easy to use. It can be a particularly attractive solution for individual borrowers with floating interest rate home loans, as there is no fee on making part-prepayments on their home loans.
Foreclosure
Here, we will take you through an easy and convenient method on how to create a home loan calculator with a prepayment option in an Excel sheet. Last but not least, it is critical that Bank update your Prepayment details in CIBIL Database. Your current balance against Home Loan account in CIBIL report will be updated with revised principal outstanding.
The purpose of this blog is to spread financial awareness and help people in managing money. Please note that the views expressed on this Blog are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment advice or legal opinion. Let’s take a small example how much interest you can actually save when you prepay your home loan. While loan pre-payment is known to be highly beneficial, there are a few things every borrower should know. 2% charges will be levied if the prepaid amount grosses 25% of the opening principal amount each financial year.
Assuming, your current Home Loan ROI is 10% and you have availed 80% of property value as Home Loan. In present scenario, average appreciation in property value is 5%. Infact in few cities, there is a drop in property prices during last 1 year. Effectively your property value is depreciating by approx 3% on yearly basis if it is on Home Loan. I have also explained these points in detail in my post 5 Disadvantages of Home Loan. To summarize, Home Loan eats into return from your property.
You can either have your lender shorten the tenor, in which case you roughly pay the same amount as EMI, or you can continue with the same tenor, in which case your EMIs reduce. You can use it for meeting major expenses or buying an asset.A personal loan is a great tool for meeting immediate fianancial requirements. The market is flooded with multiple options of personal, having their own merit and benefits. Good research will enable the borrower to get a better deal with more flexible repayment options. It is best to opt for an SBI home loan prepayment during the initial years of the loan.
Loan to select ICICI Bank credit card customers based on their spends transactions pattern and payment history. In short, Home Loan Prepayment is better option in majority of cases as average returns is in the range of 8%-9%. If it’s a dual-rate loan and currently the borrower is on a floating interest rate. Does not take into account any penalty charges / bounce charges / late payment fees, etc. The outstanding principal is not the total Home Loan principal amount but only the amount yet to be serviced. For example, if the total sum borrowed is Rs.10 Lakh and you have already repaid Rs.2 Lakh, the outstanding principal is the difference of the two, i.e., Rs.8 Lakh.
For Self-occupied property borrower will claim interest deduction of 2 lakh. Now catch is that Borrower has to forego Tax benefit on HRA allowance which is never accounted in cost benefit analysis calculation even by well known Financial Planners. In same case, considering EMI will be 39k per month for 20 year Home Loan thus monthly income of a borrower must be approx 97.5k. With conservative basic salary of approx 58k i.e. 60% of Post tax salary borrower must be claiming HRA of Rs per month @ 40% of Basic Salary.
No comments:
Post a Comment