Hey All,
Lets starts this post with first understanding my home loan situation. I have two home loans going on.
- Home Saver loan which has an outstanding of roughly Rs. 20 Lakhs; roughly $24K+ dollars with an interest of 9% per annum as its a home saver category loan. Paying an EMI of close to Rs.36K+ INR
- Normal Home Loan has an outstanding of Rs.80 Lakhs; roughly $94K+ dollars with an interest of 8% per annum. Paying an EMI of close to Rs.72K+ INR
The other thing to note is that for my Home Saver Loan which is of Rs.20 Lakhs I already have an amount of Rs.20 Lakhs parked in the loan account. So what is happening here is that the full EMI[Equated Monthly Installment]which is Rs.36K+ that I give every month goes directly in reducing my principal amount, which means I am paying zero interest here. And whereas on the other home loan account almost all the EMI amount goes to paying the interest amount and there is very less amount that is deducted towards the principal. Now coming to the bigger picture on my plans to saving 4 Million INR i.e. $47K dollars.. How do I do it. Picture this now very closely and i am sure you will be able to vision it clearly what i am trying to achieve here.
Understanding the Impact of My Current Home Loan Setups
Home Saver Loan (₹20L at 9%): Since I have ₹20L parked in the account, I am effectively not paying interest. Every EMI that I pay reduces the principal directly. No brainer here..
Standard Home Loan (₹80L at 8%): I am paying interest on the full amount with an EMI of ₹72,000. This something bothering and an action needs to be taken.
What Happens If I Withdraw ₹20L and Prepay the 8% Loan?
My home saver loan will start incurring interest at 9% on ₹20L.
And my standard home loan balance will drop from ₹80L to ₹60L, reducing interest paid at 8% on ₹20L.
If you are here with me then I guess what I am now going to share with you will clear things as to how I plan to SAVE 4 Million INR...Yes..its roughly $47K and I am serious that I am going to execute this plan in coming days i.e. in the first week of April,2025. Have a look at this NOW...
Results of Prepaying ₹20 Lakhs on MY ₹80 Lakh Home Loan...
Initial Tenure: 204 months (17 years)
New Tenure After Prepayment: 123 months (10.25 years)
Months Saved: 81 months (6.75 years)
Total Interest Saved: ₹38.32 lakhs
Breakup of ₹38.41 Lakh Interest Savings
Total Interest Payable Before Prepayment (₹80L Loan at 8%)
- ₹66.28 lakhs over 17 years (204 months)
Total Interest Payable After ₹20L Prepayment (₹60L Loan at 8%)
- ₹27.87 lakhs over 10.25 years (123 months)
Total Interest Saved Due to Prepayment
- ₹38.41 lakhs (₹66.28L - ₹27.87L)
Now How Did I Arrived at 81 Months Saved?
Without prepayment, it would have taken 204 months (17 years) to clear the loan.
After prepayment, the tenure reduces to 123 months (10.25 years).
- Total months saved = 204 - 123 = 81 months (6.75 years).
The Conclusion
Even though I land up paying a 9% interest for ₹20 lakhs in my home saver account. We can clearly see taking the funds from the home saver account and prepaying the home loan account having a loan of Rs.80 lakhs is definitely going to be more beneficial and would save me around 4 Million INR..thats HUGE amount. Then what the hell I was waiting for since all these days..Simply ignorance and now that I have been enlightened my next step is to be visiting bank and will be making a prepayment of Rs.20 lakhs to reduce the normal home loan account from Rs.80 lakhs to Rs.60 lakhs and will continue to pay the same EMI which is close to Rs.72K+ and ultimately SAVE my self $47K+ dollars & then maybe invest some dollars here on buying the #HIVE tokens and powering it all UP... What do you all SAY about my plan on - "Home Loan Prepayment Plan - How it can SAVE me almost 4 Million INR roughly $47K Dollars - Lets Explore..."
#HomeLoan #LoanRepayment #PrepaymentStrategy #EMISavings #HomeSaverLoan #LoanTenureReduction #FinancialPlanning
Best Regards
Paras