POSTED BY December 18, 2012 6:04 pm COMMENTS (9)ON
Good day gentlemen
I am looking out for a home loan and as such have narrowed in on two players, viz. State Bank of India & HDFC. I have very little knowledge & experience in financial matters & this is my first major step in building up my assets. I have a small query which I wish to share here & am hoping to seek the advice & guidance of people on this forum.
I understand that every EMI has a principal component & an interest component. The interest component being higher at the start of the repayment period & the principal component being lower. Also, the EMI for a loan with a longer tenure would be smaller than for one with a shorter tenure, although the interest payable would be greater.
My question to you gentlemen, is it advisable to take a loan with a longer tenure to have smaller EMIs & use the amount saved in EMIs along with any surplus amounts to make prepayments toward the loan amount (principal) rather than pay high EMI & possibly not have enough funds toward prepayment or bringing the principal amount down? Is there some way of physically calculating this either manually or through an excel sheet.
Your guidance & replies toward the same would be highly appreciated.
Thanks & Best Regards