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From the above image, we can easily understand visually that the EMI consists of the monthly Interest and the monthly paid-up Principal amount. In this step, we’ll calculate the monthly Interest that we have to pay in our EMI. If the home loan has been availed of by an individual on a fixed interest rate.
If it’s a dual-rate loan, where the home loan interest rate is fixed initially, Banks can levy a prepayment charge if the prepayment is made under a fixed-rate loan. This is possible because prepaying against the housing loan reduces your interest component. The amount paid towards part pre-payment is deducted from the principal amount outstanding. Now just click on ‘Calculate’ on the home loan part prepayment calculator and you can see the interest savings from going ahead with a prepayment against the home loan. The part-prepayment of Home Loan lowers the principal outstanding, and this reduced principal amount can either translate to lower EMIs or a reduced tenor.
IIFL Finance Home Loan Prepayment Charges
The benefit of making part-prepayments on your Home Loan balance can reduce both your EMI and repayment tenor. As making part-prepayments on your Home Loan repayment amount directly brings down your loan balance, you take lesser time to repay the entire amount and you have lesser to repay . You have the choice to either shorten your tenor or reduce your EMIs. Since longer repayment tenors result in increased interest outflow, part-prepayment is a simple way to reduce your interest liability. It is an instalment payment before its due date and is usually a lump sum amount.
The users should exercise due caution and/or seek independent advice before they make any decision or take any action on the basis of such information or other contents. Getting your dream home is more affordable with low interest rates. Loan Fees & Charges includes Processing Fees, Administrative Charges etc. along with service taxes, entered either in Rupees or as a percentage of Loan Amount.
Points to keep in mind before pre-paying a loan
Some banks insist on source of fund for Home Loan Prepayment therefore kindly carry last 6 months bank statement of bank account from which you are prepaying the amount. Acknowledgement will also mention principal outstanding after prepayment and balance Home Loan tenure or new EMI as the case may be. Acknowledgement should be signed and stamped by the authorized representative of the bank. If you are a Grihashakti customer, check our Schedule of Fees and Charges to know the exact charges applicable on prepayment / foreclosure. The majority of lenders in India like Grihashakti offer prepayment facilities to their home loan customers. A borrower must have lumpsum funds available to initiate the part-prepayment of a Home Loan.
For individual borrowers, for balance transfer or refinancing, 2% of the amount being prepaid in addition to the applicable taxes and other statutory charges will be levied. Loan Insurance is the single premium amount, for the Home Loan Protection Plan OR Term Insurance Plan, that gets included in your home loan amount. If you want to guesstimate this amount, use the LIC premium calculator to calculate yearly premium for eTerm plan using your age, loan term and loan amount for Sum Assured. Suppose, we’ve taken a Loan Amount of $1,00,000 for 1-year Tenure at 8% of Interest Rate.
What should I do if bank prepayment calculations do not match with mine?
When you repay your loan fully or partially ahead of the scheduled tenure, it’s called prepayment of home loan. Home loan prepayment works for you when you are looking to reduce your debt burden. Another dilemma in the mind of a borrower whether to reduce EMI or Home Loan Tenure at time of prepayment.
Those who have purchased house property from builders through bank loans may seek a moratorium on loan. The property of several home buyers may be under construction phase, and the borrower may not be in a position to postpone home-buying decisions anymore. Never use your emergency fund for making your home loan prepayment. If the home loan is being prepaid in the first 6 months, then 2% of the amount being prepaid in addition to the applicable taxes and other statutory charges will be levied.
Assumes that you will continue to pay the same EMI as per the original schedule after making the part pre-payment. Many people are looking to maximize the tax benefits of home loans. But if you wish to manage your home loans wisely without compromising other goals, do read this detailed post on managing home loans. If you have taken home loan from the bank like SBI you must have done lien. Lien is right given to another by the owner of the property to secure a debt. How much total amount you will be paying towards the home loan.
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.
Part-prepayment limits liabilities when opted for at the right time. The Home Loan Part-Prepayment Calculator from Bajaj Housing Finance enables borrowers to decide the profitability of this advance payment made against their housing loan liability. IIFL Finance offers a home loan at affordable interest rates with tenure ranging up to 25 years.
HRA benefit cease to exist in case of self occupied property. In short, we need to account HRA loss of approx 2.8 lakh from Income tax calculations which will square off the income tax deduction of 2 lakh towards Home Loan Interest. Making a home loan prepayment is not a decision to be made in a hurry. You must take the following factors into consideration before you arrive at a decision.
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.
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