Here's what you actually pay for your dream home!

Q: Taking a home loan is a long-term debt commitment. So, it is advisable to go for a home loan which you can manage with your existing finances.

Rajiv,

18th February 2015

Home Loan in Ahmedabad

home loan

interest rate

emi

m chug grande exotica project

residential homes

financial planning

home loan calculation

calculation of emi

Follow Discussion

Also see discussions for

Ahmedabad Home Loan Home Loan in Ahmedabad

Replies (9)

Hello all, I would be happy if anyone tell me what is the effective way to pay off your home loan quickly?

V. Victor,

12th November 2015

Comment

Hi Victor, I can understand your concerned, Paying off a home loan is a big financial stress. Sometimes the term EMI seem to be an inaccurate for most home loan borrowers as these are rarely easy to pay off. Even though there is no better feeling than owning your dream home paying off the hefty EMIs becomes a financial burden for most home buyers.

david.m,

12th November 2015

Hello,
I know one home loan expert who said that by knowing more about the your home loan terms and condition you can resolved it as quickly as possible.

ajit pandey,

12th November 2015

Thanks ajit for your suggestion and I would be really glad to you if you tell me more about repayment of home loan as quickly and in efficient way?

V. Victor,

12th November 2015

Hi, There are various ways through which you can pay off your home loan faster:
1. Clear understanding of your finances
2. Know your EMIs scheme
3. Partial payments
4. Reduced your extra expenses

ajit pandey,

12th November 2015

Many nationalized banks and other financial institutes allow their customers to make a fixed number of partial payments during a financial year. try to utilize it for the partial payment of your loan, whenever you get some extra income from any source like Diwali bonus, etc.

akhilesh pal,

12th November 2015

@Neeraj,
So, it is advisable to go for a home loan which you can manage with your existing finances. Although a lot of efforts are being made by the banks to make borrowing lucrative, but care should be taken to understand that there are a lot of hidden costs involved like pre-payment charges, processing charges, and foreclosure charges, among others. It is, therefore, always wise to choose a home loan which will not disturb your financial health.

Rubiya,

20th February 2015

Comment

@Rubiya,
Now let us consider a situation where you have some surplus amount with you. Then you would have 2 options:

1. One, you can foreclose the loan by pre-paying it with your surplus amount. By pre-paying the loan amount, they will reduce the number of EMIs and can invest the amount saved from EMIs into diversified portfolios until you repays the loan.

2. The other option is you can continue with the same EMI and invest his total surplus amount into diversified portfolios.

Neeraj Rao,

19th February 2015

Comment

Thanks for the feedback Neeraj,
It is clear that the major component of EMIs paid to the bank in the early years of loan repayment is deducted as interest. At the end of the 5th year, i would pay an amount of Rs 25, 94,942 as interest, while the principal component is only Rs 5,37,671. If i continues to repay the loan over a span of 20 years, then the total amount to be paid to the bank comes out at around Rs 1,25,30,453. OMG!!!!

Rubiya,

18th February 2015

Comment

At the end of the loan period of 20 years - assuming that the interest rate remains the same -- you would pay Rs 53, 55,000 as the principal amount, while a huge sum of Rs 71,75,453 would be paid as interest. This means you would pay 135% of the total borrowed amount as interest alone!

Neeraj Rao,

18th February 2015

Comment

Well Rubiya,
I am trying to answer this question with a real life example and for this i am explaining home loans under two heads -- one is principal and interest, while the second one is tax implications.

Suppose, the total cost of the flat, including amenities, was Rs 63, 00,000. As per norms, you paid 15% of the down payment amount using his cash reserves, which came to around Rs 9,45,000 while the loan was available at 10.15%. Your duration of the home loan was 20 years, and the EMI came to around Rs 52,210.

Neeraj Rao,

18th February 2015

Comment

However, but one appropriate question that usually trouble a home buyer is: 'How much do I actually pay for my dream home?'

Rubiya,

18th February 2015

Comment

You are absolutely right Rajiv,
Banks make money on the interest they charge on loans. Typically, up to 85% of the property value is provided as loan, while 15% margin has to be borne by the borrower using his/her own savings/resources. A majority of home buyers take their purchase decision taking into consideration the EMI as their affordability factor.

Neeraj Rao,

18th February 2015

Comment

Hi Rajiv,
Buying a home does not only ensure financial security for you and your family, but also saves plenty of money that you would else pay just for living in a rented house. During the past decade or so, home buying has picked up tremendously also because of the easy availability of home loans. Banks have, in fact, made easy the entire process of home loan financing in a bid to ride this wave, which comes with a huge sentimental hope.

Rubiya,

18th February 2015

Comment