Pay an Extra EMI Every Year Will Help You in Paying Off the Loan
May 25, 2017 Home Loan
Buying a house might be a goal but it isn’t achieved fully until the entire loan taken for the same has been repaid. Generally, the monthly EMI should not be more than 40 percent of your monthly income to help balance the regular expenses and savings without burning a huge hole in the pocket. But when you take a loan for a long amount of time, we all want to pay it off as soon as possible. There are ways to which you can reduce the time period of your loan amount by few months.
At the end of the financial year, employees get a bonus. It will be wise in long run to use this bonus to pay off the EMI by paying extra a month every year. Loan lenders can also try to save up EMI worth of two or three months every year to help in repayment of the loan early. When you pay off your debt amount early, it reduces the time period of loan repayment. Though it can be little tough at the starting to pay off to save for the extra EMIs and pay them off. It is a good idea in the long run.
Keeping the balance in the household finances and monthly EMI is a struggle but a worth investment.
Let us consider that the buyer took a loan of Rs 20,00,000 for a time period of 20 years at 9 percent per annum. That means he will have to pay an EMI of Rs 17, 995 for 240 months to repay the loan. The total amount EMI that the buyer will pay at the end of 240 months will be Rs 43,18,800. The buyer will pay an interest of Rs 23,18,800 by the end of 20 years.
If the buyer tries to save an extra EMI for saying first four years. That mean, paying an extra EMI of Rs 71,980. That means you have reduced your total loan period by few months and loan amount.
Also, you can subsequently reduce your EMI amount by saving extra for three years and pre paying them every three years.
At the end of the financial year, employees get a bonus. It will be wise in long run to use this bonus to pay off the EMI by paying extra a month every year. Loan lenders can also try to save up EMI worth of two or three months every year to help in repayment of the loan early. When you pay off your debt amount early, it reduces the time period of loan repayment. Though it can be little tough at the starting to pay off to save for the extra EMIs and pay them off. It is a good idea in the long run.
Keeping the balance in the household finances and monthly EMI is a struggle but a worth investment.
Let us consider that the buyer took a loan of Rs 20,00,000 for a time period of 20 years at 9 percent per annum. That means he will have to pay an EMI of Rs 17, 995 for 240 months to repay the loan. The total amount EMI that the buyer will pay at the end of 240 months will be Rs 43,18,800. The buyer will pay an interest of Rs 23,18,800 by the end of 20 years.
If the buyer tries to save an extra EMI for saying first four years. That mean, paying an extra EMI of Rs 71,980. That means you have reduced your total loan period by few months and loan amount.
Also, you can subsequently reduce your EMI amount by saving extra for three years and pre paying them every three years.
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