馃攳
Home Loan EMI Prepayment | How to Save Home Loan Interest Amount | Loan EMI Calculator - YouTube
Channel: FinCalC TV
[0]
IMPORTANT: Loan Interest is more initially,
as we can see
[7]
Rs. 17,375 is more compared to 2nd month interest
[13]
You save approx. Rs. 69,442
[18]
if you make loan prepayment of Rs. 1 Lac
in 4th month of your loan tenure.
[23]
Friends, in previous video I have explained
how EMI is calculated in home loan,
[29]
using excel calculator examples.
[31]
In that video we have seen that
EMI consists of 2 things,
[35]
EMI = Principal + Interest
[38]
You should know that in your Home Loan
or any other Loan,
[43]
the EMI that you pay consists of
Principal amount & Interest Amount.
[49]
So only the principal amount is deducted every month
from your total outstanding loan amount,
[54]
and the interest amount is paid to the bank
or financial institution from where loan is taken.
[61]
In this video we will see how loan interest amount
can be reduced using simple tips.
[67]
We will see that if you make Rs. 1 Lac
as Home Loan Prepayment,
[73]
then how you can save Loan interest amount
of Rs. 68,900 throughout home loan tenure
[82]
How to save loan interest?
How much loan interest will be saved?
[88]
All these queries will be solved using
Excel Calculator Examples.
[93]
So watch this video till end,
to understand how you can
[98]
reduce home loan or any other Loan interest Amount.
[104]
Abhilash Gupta: I welcome you on my
YouTube Channel "FinCalC TV". Let's Start..
[109]
SUBSCRIBE to my channel & HIT BELL ICON
to get Latest Personal Finance News.
[117]
After watching this video, you can DOWNLOAD
my FREE Android App - FinCalC
[123]
which will help to calculate Income Tax.
[126]
This FREE App is available on Play Store.
LINK In Description.
[133]
As said earlier, Loan EMI consists of 2 things.
[136]
EMI = Principal + Interest Amounts
[141]
We will see how to reduce loan interest amount.
[145]
Friends, the loan interest that you pay depends on
loan interest rate and loan tenure,
[151]
meaning the time period of loan.
[153]
IMPORTANT: High interest rate means
high interest amount you have to pay,
[162]
& longer loan tenure means high Interest Amount
you have to pay.
[171]
Another important point, during initial
period of your loan tenure,
[176]
that is, initial 1-2 years of loan tenure,
[180]
more interest amount is taken from your EMI,
[184]
& the principal amount is less
during this initial period.
[189]
So in order to reduce your total interest amount
from your loan,
[194]
you need to make prepayments at the
initial stages of your loan tenure.
[198]
Meaning of Loan Prepayment: If you have
surplus amount that can be used,
[204]
you can use this surplus amount to
reduce your outstanding loan principal amount.
[213]
This prepayment will help to reduce
your Loan interest amount.
[221]
After prepayment is done, interest amount is calculated
based on reduced outstanding principal amount.
[230]
Let's move to Excel Calculator Examples,
[234]
& see how to reduce total loan interest amount.
[242]
As seen, I have defined some labels.
[245]
Here's the total principal amount - Loan taken by you
[254]
Interest Rates and Months remaining labels.
[264]
Total Interest Amount calculated for entire loan tenure.
[270]
Here total amount you will be paying
will be calculated.
[277]
Based on prepayments done, updated interest
will be calculated here,
[284]
& savings due to loan prepayments will be displayed here.
[295]
We will take this example:
Principal Amount = Rs. 30 Lacs
[302]
Annual home loan Interest Rate = 6.95%
[307]
Loan Tenure = 8 Years (96 Months)
[313]
EMI was calculated in previous video = Rs. 40,857
That video link in description.
[325]
Principal Remaining for first month will be
same as Principal Amount.
[330]
I'll copy this value quickly here = Rs. 30 Lacs
in first month.
[338]
I'll put EMI = Rs. 40857 based on
previous video explanation. Link in description.
[344]
This value is our monthly Loan EMI.
[349]
IMPORTANT: How loan interest will be calculated?
[354]
We have this very simple formula
to calculate home loan interest amount.
[360]
interest = monthly interest rate * principal remaining
divided by 100
[369]
So let's put this formula here.
[373]
Interest rate = 6.95%,
[379]
but divide this by 12 to get monthly interest rate.
[385]
multiply this by principal remaining amount,
[390]
& divide by 100.
[392]
So Rs. 17,375 in the first month interest amount
from the EMI value displayed.
[400]
& the difference will be the principal amount.
[405]
Means, EMI minus interest will give us
principal amount for that month.
[415]
Rs. 23,482 is the principal amount of first month.
[419]
Now what will be your principal remaining amount
in 2nd month of your loan tenure?
[424]
We will take first month principal remaining amount,
minus the principal amount we paid in first month.
[436]
since this interest amount is paid to bank.
[442]
But Principal amount we paid will be
deducted from outstanding principal amount.
[450]
Another value we will reduce is the prepayment cell.
[456]
Let's say if we make any prepayment,
that will be also considered to calculated new principal.
[464]
We will see this prepayment example in some time.
[470]
As seen, updated outstanding principal remaining
amount is calculated.
[477]
Now, EMI will be same in second month,
so I'll copy this EMI value.
[482]
Now, this interest will be calculated based on
updated outstanding principal amount.
[491]
And this Principal = EMI minus interest of 2nd month
[501]
I'll quickly extend all these values for 5 months.
[515]
As seen, principal remaining amount is
decreasing with time,
[520]
since the principal amount you are paying
is reducing this outstanding principal.
[529]
With time, Interest Amounts are also decreasing.
[536]
IMPORTANT: Interest amount is HIGH initially as seen
[548]
so interest will reduce with time,
[554]
& the principal amounts you pay increase,
which you have to pay fully eventually!
[562]
We have kept the EMI same in this case.
[566]
Comment below if you have any queries.
[570]
I'll quickly extend this EMI till 8 years of loan tenure.
[586]
Let's extend Principal remaining as well.
[590]
Interest & Principal Amounts also extended.
[594]
If we navigate to bottom of sheet
[608]
Principal Amount is highest
for last month.
[618]
Interest Amount is less
in last month.
[625]
Banks take high interest initially,
[630]
so better to make some prepayments initially,
[638]
if you can afford, to save maximum interest amount.
[646]
As seen, principal amount increases with time,
while keeping the EMI same.
[654]
Now we'll put the total interest amount here.
[661]
Using the autosum formula,
[671]
We get total Interest amount as shown.
[678]
We have considered EMI will be same.
[682]
Copying the total interest amount here.
[687]
So we can see total interest,
paid by you = 9.18 Lacs
[698]
Total Amount as displayed is,
Interest Amount + Loan Principal
[706]
So for principal = Rs. 30 Lacs,
Tenure = 8 Years, Interest % = 6.95%
[714]
we have assumed that interest rate
will not change with time,
[719]
then you pay total interest = Rs. 9.18 Lacs,
[726]
& total amount you'll pay back to bank is,
principal + interest = Rs. 39.18 Lacs approx.
[735]
IMPORTANT: How to save this Interest Amount
after watching these numbers?
[744]
You have only one option:
"To prepay during initial months."
[752]
Depends on you how much prepayment
you can do.
[757]
More prepayments = More Interest Saving.
[762]
EXAMPLE: Let's say we do prepayment of
Rs. 1 Lac in 4th month,
[769]
Notice the outstanding principal
amount reduction here.
[787]
Principal remaining is reduced since
we have done a prepayment here.
[802]
And as seen, Interest amount is also reduced,
[811]
since interest calculation depends on
principal remaining.
[818]
As seen, updated Interest is now Rs. 8.49 Lacs.
[827]
And total Interest savings is Rs. 69,442.
[834]
So you save approx Rs. 69,442
after pre paying Rs. 1 Lac in 4th month.
[845]
In this way we can save
Loan Interest Amount.
[852]
Again, if you do more prepayments,
you'll save more interest amounts.
[868]
Here let's calculate total amount
you'll be paying.
[880]
So you'll pay total amount of Rs. 37.86 Lacs.
[890]
So friends, without prepayment you pay
more loan interest amounts,
[898]
& pay less interest amounts after
doing some prepayments.
[904]
I'll show one more thing,
without prepayments, savings = Rs. 0
[912]
As I said, you can save maximum interest
only via prepayments in initial months.
[918]
If you make prepayment in last year of loan,
[928]
Let's say Rs. 1 Lac prepayment done in 7th year,
[934]
As seen, only Rs. 5,994 is saved.
[940]
If this same prepayment is done initially,
as seen, we could have saved approx Rs. 69,442.
[948]
This proves that initial prepayments
will save Maximum Loan interest amount.
[963]
So friends, you can check how much you can save
on your loan doing prepayments.
[978]
RECOMMENDED: If you can afford, make prepayments
every 3-4 months initially to save interest.
[992]
As seen, doing 4 prepayments in 1st year,
we save approx Rs. 2.42 Lacs interest amount.
[1005]
This way interest will be saved,
& loan tenure will be reduced.
[1011]
You can watch my other videos:
Income Tax Excel Calculator Video,
[1029]
PPF Excel Calculator Video,
How to get maximum interest in PPF,
[1045]
SIP returns excel calculator video,
[1066]
HRA excel Calculator video,
[1076]
All videos in a Playlist,
Link in description.
[1087]
Friends, as seen, it's very easy
to save Home loan interest Amount.
[1094]
IMPORTANT: High interest is taken from you initially.
[1104]
Principal amount is less initially.
[1111]
Best decision is to make some prepayments
initially if you can afford.
[1120]
This home loan Excel download link is in description.
[1134]
DOWNLOAD my Free Android App - FinCalC,
which will help to calculate income tax.
[1144]
App Download Link is in description.
[1149]
Please Like & Share this video with Friends.
[1155]
Comment below your queries.
[1159]
SUBSCRIBE & Hit Bell Icon,
for more videos.
[1167]
See you again. Thanks for watching :)
Most Recent Videos:
You can go back to the homepage right here: Homepage