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Akash applied for a home loan for an amount of Rs 10 lakh for a period of 15 years at an interest rate of 12%. His EMI in this case came out to around Rs 12,000. His payment schedule for the first 6 months was as follows:
Payment No. Loan outstanding (Rs) Interest paid (Rs) Principal paid (Rs) 1 10,00,000 10,000 2,000 2 9,98,000 9,980 2,020 3 9,95,980 9,960 2,040 4 9,93,940 9,939 2,061 5 9,91,879 9,919 2,081 6 9,89,798 9,898 2,102 Total principal repaid 12,304 Now, suppose Akash has spare cash worth Rs 50,000 with him for a period of six months. So instead of going for a regular loan, he opts for a ’set off’ loan at the same terms and parks the spare cash in his linked account. In this case, his payment schedule will be:
Payment No. Loan outstanding (Rs) Interest paid (Rs) Principal paid (Rs) 1 9,50,000 9,500 2,500 2 9,47,500 9,475 2,525 3 9,44,975 9,450 2,550 4 9,42,425 9,424 2,576 5 9,39,849 9,398 2,602 6 9,37,247 9,372 2,628 Total principal repaid 15,380 As you can see, Akash would manage to repay his loan to an extent of an extra Rs. 3,000. In the long run, this will help him to repay his loan ahead of schedule.
Published on May 6, 2010 · Filed under: Home Loan Tips; Tagged as: Home loan, Home Loan eligibility, home loan guide, Home Loan Interest
Set Off Home Loans
One Response to “Set Off Home Loans”
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Harsh said on August 19th, 2011 at 4:44 am
Very good information
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