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Real Estate — Intermediate
Compare home loans on total interest paid over the full tenure, not just the headline rate. And prepay whenever possible.
Concept
Compare home loans on total interest paid over the full tenure, not just the headline rate. And prepay whenever possible.
Home loans in India are mostly floating-rate, linked to the bank's external benchmark (repo rate). Key costs: interest rate + processing fee (0.5-1%) + insurance. Tax benefits: Section 24 (₹2L deduction on interest), Section 80C (₹1.5L on principal). PMAY (Pradhan Mantri Awas Yojana) gives interest subsidy of 3-6.5% for first-time buyers in lower income groups.
हिंदी मेंIndia में home loans mostly floating-rate हैं, bank के external benchmark (repo rate) से linked। Costs: interest + processing fee (0.5-1%) + insurance। Tax benefits: Section 24 (₹2L interest deduction), 80C (₹1.5L principal)। PMAY first-time buyers को 3-6.5% interest subsidy देता है।
Example
See it in action
On ₹50L loan at 8.5% for 20 years: EMI = ₹43,391, total interest = ₹54.1L. If you prepay ₹2L/year extra from year 3, loan closes in 14 years and you save ₹18.7L in interest. Balance transfer to a 8.0% rate saves another ₹3.5L.
हिंदी में₹50L loan 8.5% पर 20 साल: EMI = ₹43,391, total interest = ₹54.1L। Year 3 से ₹2L/year extra prepay करें तो loan 14 साल में close, ₹18.7L interest बचत। Balance transfer 8.0% पर करें तो ₹3.5L और बचत।
Key takeaway
Remember this
Home loan prepayment is the best "investment" — it gives you a guaranteed return equal to your loan interest rate, tax-free.
A "fixed rate" home loan in India usually means fixed for 2-3 years, then it resets to floating — read the fine print carefully.
हिंदी मेंHome loan prepayment सबसे अच्छा "investment" है — guaranteed return मिलता है equal to loan interest rate, tax-free।
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