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👉🏻 Use this facility to deposit extra money and reduce outstanding balance
👉🏻 Which you can use in case of emergency
🏡 Home loan overdraft: An illustration
👉🏻 For instance, in January 2019, you took a home loan of INR 80 lakh for a tenure of 20 years at an interest rate of 8.6%.
👉🏻 As per the calculation, you will be paying a monthly EMI of INR 70,000.
👉🏻 Now, let us assume that you have a surplus of INR 4 lakh, and makes a partial payment after 24 regular EMIs to reduce total amount.
👉🏻 Pre-paying the extra funds will keep the EMIs unchanged in an ordinary home loan. The principal-interest ratio is unchanged. However, in a home loan overdraft, if you pay INR 4 lakh to the account linked to the home loan, the EMI will reduce to INR 66,000 from the next month, decreasing the tenure.
👉🏻 Here the interest is calculated on the outstanding principal amount. So the more money you put in your account, the more interest outgo your diminish.
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#homeloan #home #prepayment #reelsinstagram | Posted on 03/May/2023 14:19:19
