HDFC home loan of 50 lakh
If you take home loan of 50 lakhs of INR, from HDFC bank.
Let’s look at a few things you may have to keep in mind, and consider.
Your Loan EMI!
You can calculate your Loan EMI and Total Interest due in a snap!
Also, the exact nitty gritty of your loan details.
The loan amount: – which is 50 lakhs.
The tenure: – the longer the better and cheaper.
Interest Rate in %:- Depends upon the tenure and procedures.
Processing Fee: – (% of loan amount). However, on such a large amount of loan, HDFC does not charge much of a processing fee. Neither do other private banks.
Would you like to make Pre-payments?
If your loan is HDFC, then yes, go!
Your Monthly Loan EMI: – Calculated by the EMI calculator provided by the HDFC Bank website.
So, come to the basics.
What is an EMI?
EMI stands for Equated Monthly Installment which is a fixed amount of payment a borrower has to make to the lender at a specified date on monthly basis. EMIs consist of your principal loan amount and interest amount, payable every month.
Although the EMI remains fixed for every month if you avail an HDFC home loan, the amount paid towards principal and interest changes.
The interest component constitutes a major portion of the EMI payment in the initial stages. However, as the loan period progresses and the principal outstanding reduce the portion of interest repayment decreases. This happens until the end of the loan period when the entire loan amount has been paid off.
Consider a situation where you have decided that you are going to take a loan, preferably, a home loan. The first step with taking the loan is not applying for it but actually sitting down and calculating how much it is going to cost you. This cost is calculated in terms of the monthly payments that will have to be paid towards the loan and are referred to as EMIs or Equated Monthly Installments.
To get to the EMI you basically need to calculate the amount borrowed, which is, of 50 lakhs of rupees INR; the interest that you will have to pay on the amount and the amount that you will pay as the processing fee for said loan. Once have all this information, you will have to sit down with a pen and paper to see how much the monthly payment will be for your chosen loan tenure. Once that is done, you may realize that the EMI is too big and you need to reduce it somehow.
To do this you will either have to adjust either the loan tenure or the amount that you wish to borrow and do the calculations all over again. To make it simpler the HDFC website exists. Click here to read about home loan by HDFC bank.
Once you have found the right EMI for you, you will start looking at other banks or financial institution that offer you these loans and will realize that you have to repeat the same calculation for each bank and make sure that you make no mistakes. Or, to avoid any problems, just take it from HDFC Bank!
Just reading about this process, it is so tiring then you will wish there was an easier way to do this whole exercise quickly and efficiently so that you can make your decisions fast and that is where the EMI calculator comes into the picture.
How EMI Calculators Work?
To put it quite simply, an EMI calculator is a tool that will require you to enter the amount you want to borrow, the duration of the loan, the interest rates and the processing fee and it will do the rest.
The basic formula that works behind an EMI calculator is:-
E = P x r x (1+r)^n/((1+r)^n – 1)
E is the amount that you will have to pay every month; basically the EMI.
P is the amount that you want to borrow, that is 50 lakhs.
r is the rate of interest that is applicable but calculated on a monthly basis instead of the annual rate of interest. It is obtained by using the formula r = (annual interest/12) x 100.
n is the duration of the loan in terms of months. So if you select a term of 5 years, n will be 60.
This is the most basic formula that is used by the calculator but there are some things may even include like the processing fee for the loan into the calculation of the monthly installment. However, a 50 lakhs worth home loan will not be charging any processing fee.
Now, consider home loan amount is 50 lakhs, loan tenure is 30 years and interest rate is 8.65% then,
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