Home Loan EMI: This small trick can help you buy a house AND save over Rs 40 lakh!

Home Loan Calculator: One thing all salaried people want to possess is a house in their name. But the costs have spiralled dreadfully in recent years. While real estate agents and even bank telecallers leave no opportunity to convince people to go for a home loan, one must think of all the pros and cons before taking the plunge.

The minimum amount you need to buy an affordable house in a reasonably good society in big cities like Delhi-NCR is around Rs 35-40 lakh. Out of this, banks may provide up to 80% loan, while you will have to pay the remaining 20%. 

Suppose you get a loan of Rs 30 lakh. The following illustration will show you how a shorter loan repayment period will help you save lakhs of rupees. We use HDFC online home loan calculator tool to find out the EMI and total amount you will have to pay to the bank for five repayment periods - 5, 10, 15,  20 and 30 years. Calculate Home Loan Here

30-year Home Loan

*Source: HDFC

2. 20-year Home Loan

*Source: HDFC

3. 15-year Home Loan

Source: HDFC

4. 10-year Home Loan

5. 5-year Home Loan

*Source; HDFC

You can see from the above images that the total amount you end up repaying the bank increases drastically as the loan tenure goes up. Similarly, the EMI comes down when the tenure is longer. If you chose a loan repayment tenure of 10 years, you will have to pay a monthly EMI of Rs 37,679/month (Total: Rs 45,21,453). However, if you pick a longer tenure of, say 30 years, then you need to pay an EMI of Rs 23,708 while the total payment you make to the bank is Rs 85,34,961 (This is around Rs 40 lakh more than what you pay to the bank in 10 years.) Hence, you should always opt for a shorter repayment period.

Certainly, this will improve your burden, but it will prove to be a short-term pain for a long-term gain!