Buying a home is a major milestone, and for most people, it comes with a home loan. While loans make homeownership more accessible, the interest paid over the loan tenure can sometimes be shockingly high.
But what if we told you that you could save up to ₹1 crore on your home loan interest? Sounds impossible? It’s not.
With a simple strategy of paying a few extra EMIs each year, you can drastically cut down your loan tenure and the total interest you pay. Here’s how.
A Typical Home Loan Scenario
Let’s take a standard case:
- Loan Amount: ₹1 Crore
- Tenure: 25 Years
- Interest Rate: 8.5% per annum
Total Interest Payable: ₹1.41 Crore
That means, over 25 years, you end up paying ₹2.41 Crore (₹1 Cr principal + ₹1.41 Cr interest).
The Power of Paying Extra EMIs
Now, what happens if you decide to pay extra EMIs every year? Let’s break it down:
1 Extra EMI Per Year
- Loan Tenure: Reduced from 25 years to 20 years
- Interest Payable: ₹93.25 Lakhs
- Total Interest Saved: ₹47.75 Lakhs
Just one extra EMI a year helps you save nearly ₹48 Lakhs in interest!
2 Extra EMIs Per Year
- Loan Tenure: Reduced to 16 years and 11 month
- Interest Payable: ₹63.46 Lakhs
- Total Interest Saved: ₹77.54 Lakhs
You’re saving close to ₹78 Lakhs with just two additional payments every year.
3 Extra EMIs Per Year
- Loan Tenure: Reduced to 14 years and 9 months
- Interest Payable: ₹42 Lakhs
- Total Interest Saved: ₹1 crore
That’s almost a ₹1 crore saved — simply by paying three extra EMIs each year!
What Are Extra EMIs and How Do They Work?
An extra EMI is an additional monthly installment paid on top of your regular EMI. When you pay extra, the principal amount reduces faster, which in turn reduces the interest charged in the long run.
These payments can be made:
- Annually (during bonuses or appraisals)
- As part of planned savings
- Anytime you have surplus cash
The earlier you start paying extra EMIs, the higher your savings will be.
A home loan doesn’t have to mean paying double the amount you borrowed. With smart financial planning — like paying just a few extra EMIs every year — you can save lakhs or even a crore over the life of your loan.
If you’re planning to take a home loan or are already servicing one, consider this strategy seriously. Your future self (and your wallet) will thank you!