When you take out a home loan, your lender will require you to make regular payments called mortgage installments or EMIs. To make your home loan interest-free, there are a few things you can do. One option is to calculate Home loan EMI. This will give you an idea of how much you need to pay each month in order to make your home loan interest-free. Another option is to make extra payments towards your home loan. This will help you reduce the amount of interest you have to pay and will help you pay off your home loan faster.
Buying a house is like achieving a milestone in life. It is not only a major investment decision but also has great emotional value. It used to take years of planning and saving by the homeowner to make his dream come true in reality.
But at present, a house can be purchased when you decide. It is made possible due to a home loan. Buying a home loan is a new craze among the younger generation below thirty. In search of stability, they calculate the home loan EMI even before getting the home loan.
Further, anyone with an average income is eligible to get a home loan from a bank. So buying a home with a loan must be very easy, right? Wrong, reality can not be far from it. Increasing home loan rates makes the management of money a challenge.
People with home loans complain that they do not leave with any savings at the end of the month due to paying hefty checks for home loan EMI. This situation can continue till full home loan tenure, which can be extremely stressful for the debtor, who does not leave with any money to invest in another source to improve their financial situation.
Although the situation is dire, many people still prefer home loans because they will have their own homes and not have to pay rent at the end of their suffering. And this will also improve their status in society even though it comes with a great cost.
But if you are told that you can make your Home loan rate interest-free, it may sound unbelievable to you. Good news! It is possible to make your home loan interest-free. Here we are going to tell you how you can make that possible.
How is home loan astronomical?
When you decide to take a home loan, you first calculate the home loan EMI. Many banks say they give home loans at a minimum interest rate, and you get the high end of the bargain. It is not true you pay an astronomical amount compared to the home loan you have taken.
Suppose you have taken a home loan of INR 5000000 on which the home loan rate of interest is 7% for a tenure of 20 years. When we calculate the monthly home loan EMI, it is INR 38765. So the total interest amount you are paying is INR 43,03,589. Finally, how much money have you paid to the bank? It is a whopping amount of INR 93,03,589. For better understanding, take another example where you have taken a home loan of INR7000000.
| calculate Home loan EMI | |
| PRINCIPAL AMOUNT(RUPEE) | 7000000 |
| TENURE (IN YEAR) | 20 |
| HOME LOAN RATE OF INTEREST | 8% |
| EMI PER MONTH (IN RUPEE) | 58551 |
| INTEREST PAYABLE | 7052193 |
| FINAL AMOUNT | 14052193 |
As you can see, on a home loan of INR70,00,000, you have to pay INR 70,52,193 at a rate of interest of 8%. How unfair it seems. Due to a lack of financial awareness, many become victims of such loan schemes. Some need to learn how to repay their home loan without paying interest.
How you can get Home Loan Interest Free
You can cover the interest cost by starting a Systematic Investment Plan (SIP) at 0.10% of your home loan.
Let’s understand the previous example where we have a principal amount of INR 5000000 with home loan interest is 7%, and Emi was INR 38765. Here you will have to invest in SIP with INR 5000 (0.10% of principal) monthly for the same tenure of 20 years. Therefore your total amount invested in SIP will become 1200000 in 20 years, for which you will get total revenue of INR63,79,775. If we deduct the invested amount of 12,00,000, the amount left will be Rs 51,79,775.
Our total payable interest was Rs 43,03,589, and you are recovering 51,79,775, which will make your home loan free.
For a better understanding, let’s take another example of a home loan where the principal amount is 70,00,000.
| Calculate home loan EMI | |
| Principal amount | Rs 7000000 |
| Tenure | 20 years |
| Home loan rate of interest | 8% |
| EMI | 58551 |
| Interest payable | 7052193 |
| SIP(0.10%) | Rs 7000 |
| Invested amount (IA) | Rs 1680000 |
| Total revenue earn (TR) | Rs 8931685 |
| Final amount (after deducting invested amount) | Rs 7251685 |
As you can see from the table, you are recovering 7251685 from SIP on your home loan, making your home loan interest-free. This is an investment where you are paying for what you have taken.
Bottom line
Now you have an understanding of how you can make your home loan free. Remember how much lesser interest the bank is providing or when you calculate home loan EMI, and it seems quite affordable. The actual cost you must bear is far greater than what you are asking. In comparison, SIP is far more beneficial if you have patience.
Conclusions
Making your home loan interest free is a great way to save money on your mortgage. There are a few different ways to do this, and the best method for you will depend on your individual circumstances. However, some of the most popular methods include refinancing to a lower interest rate, making extra payments towards your principal balance, or paying off your loan early. Whichever option you choose, you can be sure that making your free Home loan rate of interest will save you a significant amount of money in the long run.
