Effect on Interest Amount incase of high EMI vs low EMI – Indiabulls Home loan

POSTED BY gaurav1 ON February 15, 2014 12:06 pm COMMENTS (7)

Hi,

I recently took home loan form indian bulls at 10.25%. The duration of EMI (of Rs 11,000) is 30 years but I am sure that I’ll pay the loan in full in 3 years. There are no extra charges if I pay full loan in 3 years. Problem is that the guy from Indiabulls suggested me to keep the EMI low (Rs. 11,000) whereas I can pay upto Rs. 40,000 as an EMI. The reason he gave was that in first years, they deduct mostly interest.

Can anyone suggest me if I should increase EMI or continue with same EMI? I also want to know this with respect to income tax benefits.

Thanks.

7 replies on this article “Effect on Interest Amount incase of high EMI vs low EMI – Indiabulls Home loan”

  1. ashalanshu says:
    February 17, 2014 at 11:33 am

    Dear Gaurav, please open loan amortization template in exl. in your PC. Put in your loan numbers and see it on your own.

    Thanks

    Ashal

    Reply
  2. ashalanshu says:
    February 16, 2014 at 10:24 am

    Dear Gaurav, paying higher EMI from day one is better if you want to close the loan in 3Y from total interest outgo in 3Y time frame point.

    Thanks

    Ashal

    Reply
    1. gaurav1 says:
      February 17, 2014 at 11:02 am

      Hi Ashal, Thanks for answering. Can you also please tell me the mathematics behind it?

      Reply
  3. ashalanshu says:
    February 15, 2014 at 4:54 pm

    Dear Gaurav, if there is no loan, how can you continue your income tax benefit? That’s my question. As you are planning to close the loan in next 36-40 months, the income tax benefit ‘ll be no more after that. Hence your EMI of 10K or 50K does not mater much here.

    Thanks

    Ashal

    Reply
    1. gaurav1 says:
      February 16, 2014 at 9:53 am

      If we don’t see it from tax point of view but see it from interest point of view, which option is better? Paying low EMI now and paying off whole amount in the end of 3rd year or paying high EMI and complete the loan in the end of 3rd year?

      Reply
  4. gaurav1 says:
    February 15, 2014 at 4:44 pm

    I don’t know. That is why I asked here.

    Reply
  5. ashalanshu says:
    February 15, 2014 at 2:24 pm

    Dear Gaurav, what ‘ll happen to income tax benefit after 3Y when your loan ‘ll be over.

    Thanks

    Ashal

    Reply

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