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Home Loan में Interest पे भारी बचत कैसे करें? – How to manage EMI, Tenure & Loan Prepayment? - YouTube
Channel: Asset Yogi
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Namaskar, my name is Mukul, and welcome to Asset Yogi.
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In our last video, we saw that if we get cash in lump sum form
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Let's say salary increment, annual bonus, or lump sum payment in business
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So should we repay the borrowed loan with that money or should we invest it?
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Or which option becomes better in which conditions?
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If you haven't watched that video, then do watch it after this video
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Now in continuation to that, we'll see in this video
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What if let's say we choose the option of loan repayment,
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Then how much we can save on its interest
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In fact, you may get surprised after seeing the numbers
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You will get the link of the EMI calculator in the description.
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You can use it and apply different permutations and combinations
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You can put any loan amount, interest rate,
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So do it for any loan, type the tenure and you'll get all the calculations.
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Along with this, I saw many people making decisions on loan
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On the basis of minimum possible EMI to pay.
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So if you pay less EMI, your tenure becomes lengthy.
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For example, if you'll reduce the EMI for a home loan, tenure will become 25-30 years
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So here I would like to give you some homework that
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If you borrow a loan of 50 lakhs at an interest rate of 8%,
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And if you borrow a loan for 30 years Vs for 15 years
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Then what is the difference coming out in total interest payment?
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And the hint is that after watching this video,
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you'll get complete knowledge on how to do this calculation.
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Do tell me in the comment section after doing the calculation
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So in this video, we'll understand that how much loan should we borrow
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And how to save maximum on interest.
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So keep watching this video.
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While subscribing, press the bell icon so that you get the notification of the latest finance video.
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Friends, if you want to learn more concepts of investment and finance,
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Then you can check out our playlist
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For example, we have a playlist called 'Master investor series' for stocks,
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'Mutual funds series', 'Real estate series'.
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And you'll get all these on our youtube playlist free of cost.
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Let's start our video quickly.
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So in this video, we'll take the example of a home loan
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Because its tenure is lengthy like for 20-30 years
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So in that, the interest payment increases very much over the period of time
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So we have many savings options.
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But this calculation is applicable for all types of loans
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and you can use an EMI calculator for any kind of loan.
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But before that, we have some questions.
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Like whether we should buy or rent a house?
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Many people say that we'll rent a house and not buy a house because
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We're more profitable in renting a house and we can invest the saved money and get returns out of it.
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So for this also, I made a detailed video on Rent vs buy a house
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In which we studied qualitative and quantitative factors
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So kindly watch that video also.
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But in that, we discussed a major point that
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The major reason for buying a house is safety and security and you cannot consider it as an investment.
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So let's say we decided to buy a house.
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Now the next step is how big we can buy?
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So for that also I did a video on what is our eligibility for affording which size of house.
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I gave home affordability calculator in that video
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You'll get the links to all these videos in the description.
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Let's say we calculated home affordability
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That we can buy maximum this much big house
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So should we buy that big house which came out in calculation?
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So here also, you have to see that how comfortably you can pay your EMI's.
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So other factors are also included here
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That is there any other ongoing loan on you?
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Do you have a car loan or any personal loan?
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So you have to decide how much EMI you can pay maximum.
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Here we have a thumb rule that
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Total of all EMI's of all your loans should not be more than 35% of your monthly salary.
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So for example, if the salary of a person is Rs. 1 lakh
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I'm taking this example to ease out the calculations, you can calculate according to your salary.
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So if the salary is Rs. 1 lakh,
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Then that person should not pay more than Rs. 35,000 of EMI including all the loans.
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So for example, if the EMI of someone's car loan is Rs. 5000
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And let's say, EMI for a personal loan is Rs. 4000
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So EMI of Rs. 9000 is already going.
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So how much EMI can that person pay for a home loan,
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35,000-9,000 = Rs. 26,000 can be paid.
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And on the basis of how much EMI can that person pay
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It can be calculated that how much and for what tenure can that person get a loan
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And you can calculate all with the EMI calculator which is available in the description.
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And let's see how can we do its calculations.
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So when you'll click on the link to the EMI calculator given in the description,
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You can download it from here
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Many people ask how to download it so you can do it from here.
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Once you download this, it will be easy to operate it
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Do not do changes directly in the google sheets.
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So once you're here, you can enter any loan amount
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As I entered Rs. 50 lakhs.
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Let's say I want to borrow Rs. 40 lakhs home loan.
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So let's say we took Rs. 40 lakhs loan and let's assume that the interest rate for a home loan is 8%.
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We're assuming it average because you'll also get a 7-7.5% interest rate nowadays
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But earlier it was 10-11%
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So type the current interest rate. I took 8% for calculations.
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After this, we can fill the loan tenure. I wrote 20 but let's change it to 25 years.
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So first, let's understand that calculations
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And here is your EMI calculated.
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So in the example we took, the salary was Rs. 1 lakh and if he was able to pay EMI upto Rs.35,000
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So let's say that he was paying a loan of a car in which the EMI going was Rs. 5000
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And there was no personal loan let's remove that from our example,
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And let's say he's giving Rs. 5000 as a car loan
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and he can pay the remaining Rs. 30,000 as the EMI of home loan
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So here the EMI is coming out approximately Rs. 30,000
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So it's coming in that range. Hence, he can borrow this much loan easily.
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So you can do the back calculations and check that how much loan can you get and calculate the EMI.
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So let's assume he took a loan of Rs. 40 lakhs at an interest rate of 8%
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So how much interest will he pay in 25 years?
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This red-colored cell is showing the total interest payable.
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It's coming Rs. 52,61,795.
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So he will be paying interest more than the loan he took
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If I change it to 20 years, let's see now how much it comes.
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So in 20 years, the interest payable is equal to the loan he borrowed.
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But pay attention here, that earlier he was paying Rs. 52 lakhs but now he is paying Rs. 40 lakhs.
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Saving of 12 lakhs directly just because he reduced the tenure of 5 years.
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And the difference in EMI is Rs. 3000.
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Let's say if he didn't take loan for car and then he can afford it easily,
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Then the EMI would be Rs. 33,000
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And we took 35% of the salary bracket so that you can stay in a comfortable position
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and your liquidity would also not get hampered.
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Maybe you need funds for an emergency, you may be doing different investments
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or you also need money for other expenses
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So we can assume that we can pay 35% of salary as EMI per month.
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So according to that, I think if he didn't have a car loan,
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Then he would have handled it quite easily
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So we saw that savings of Rs. 12 lakhs was done so easily
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If he can increase just 3-4 thousand then he can save so much interest.
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Now I'll give you another example.
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Let's say that loan was for 25 years and let's compare it.
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He took a loan for 25 years because he wanted to live comfortably and was not able to pay more EMI.
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And he also have to pay Rs. 5000 EMI for car as well.
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And he can only pay EMI of Rs. 30,000 and not more than that
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But his salary will also keep increasing, it's not like he would be earning the same salary
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But EMI for home loan is the same because inflation is not counted on loans.
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So if his salary will increase, more cash will be generated
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Which he can add in EMI
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Sometimes people get annual bonuses, which can be paid in EMI
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Sometimes you get lump sum payment in business which you can use
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So in this calculator, I also added a prepayment option so you can add it here.
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Let's say every year you get some payment
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So assume that his position is tight for 2 years and cannot be filled
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Let's say in the 24th month, he got an annual bonus of Rs. 2 lakhs which he paid here.
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So I entered Rs. 2 lakh here.
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And let's say each year he gets some payment
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So in the 24th month he got 2 lakhs and in the 36th month also, he got Rs. 2 lakh.
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After that, let's add another Rs. 2 lakh payment in the 48th month.
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And let me reduce a zero here.
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Now his salary increases and now he can afford Rs. 3 lakhs extra payment
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So now let's add 3 lakhs payment extra every year.
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I did a payment of Rs. 3 lakhs till 108th month and now I'm adding in 120th month.
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Here you can see that the principal outstanding is just left Rs. 2,62,365.
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So let me do the total payment of Rs. 2,62,365.
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And the loan is paid completely in just 120th month which means in just 10 years
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So let's see how much is our total interest saving
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And the total interest payable is just Rs. 20 lakhs.
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Earlier it was 53 lakhs and the total savings done is Rs. 32 lakhs.
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So if you can regularly do prepayment, then you can save too much in interest.
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This is what I wanted to explain in this video.
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And we can also understand it with a graph
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See, in these interest payments, we did all the prepayments
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So the principal payments are high
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But if we don't do prepayment and pay normal EMI's
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Let me delete all these prepayments
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Then interest payments we're going like this
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Rs. 52 lakhs was the total interest payment
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Now see how it's going
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These red bars are interest payments
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So much of interest payments are going
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So initially, the interest payments are very high
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So if you want to do prepayments, try to prepay as much you can in the starting years
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That will be more beneficial for us
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and that much less interest amount will have to pay because
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we had done high principal payments earlier
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So we saw in our calculations that
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The more we prepay the loan, the more we save on interest costs.
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But besides this, there is one more big reason for prepaying your home loan
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First of all, understand that if we're buying a house on loan then who is its actual owner
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You would think that if I bought the house then obviously I am the owner.
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But no! We did a mistake here.
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We are the owner of only that much portion for which we paid money.
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Let's say if we paid a down payment of 20%, 80% of the money is paid by the bank.
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So we're only 20% owner and 80% owner of that house is bank.
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Let's say if our job Or business comes at a risk and we are unable to pay the home loan
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Then what will happen?
Will you be able to live?
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Not at all!
Bank will auction it.
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In an auction, the house is always sold less than the market rate
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So first of all, the bank will recover as much as it can, and if some amount is left,
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Then you'll get that.
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If let's say you did 10-20% of the loan payment, then you only became 30-40% owner
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And still, the bank is the maximum owner.
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So our target should be to become the owner of our house as soon as possible.
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And you should not put this money in risky investments
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Because you should have taken this decision when you bought the house
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You may have also rented a house or invested that money
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But since you decided to go for safety and security and buy a house
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So you should try to become its owner as soon as possible.
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I hope after watching this video, you understood the importance of home loan prepayments.
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If you liked this video then press the like button and share it
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With your friends and family members.
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Maybe they also had this kind of confusions
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Related to the home loan or prepayments.
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If you have some suggestions related to this video or channel
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So you can tell us in the comment section.
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If you haven't subscribed to this channel yet,
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Then please subscribe to it and press the bell icon
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so that you can get the notifications of latest videos
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We'll meet in another informative video,
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Till then keep learning, keep earning, and as always, stay happy.
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