Owning a home is a dream for many but often requires taking out a home loan because of increasing property prices and inflation. While taking out a loan is a common option, it is always wise to understand the financial commitment one would make in terms of monthly EMI and total interest payment over the loan tenure.
If you’re considering a home loan of Rs 30 lakh for the term of 30 years, then this is the guide to calculating EMI, estimating the interest burden, and making a wise decision about it.
Axis Bank Home Loan: A Viable Option?
Among so many home loan lenders in India, Axis Bank comes to mind because it offers low interest rates and quick and hassle-free approval processes. So at present, Axis Bank offers home loans that are available at an interest rate of 8.75% p.a. However, the rate may vary according to other considerations like the below:
- CIBIL Score (A higher score can secure a lower interest rate)
- Income Stability
- Loan-to-Value (LTV) Ratio
A better credit score would lead to a lower interest rate and a lower repayment burden overall.
Calculating EMI & Total Interest for a Rs 30 Lakh Loan (30 Years)
Calculating the EMI & Total Interest for Loan Amount Rs 30 Lakh (30 Years) Rs 30 lakh at 8.75% interest for 30 years will yield the following repayment window:
- Repayment on a Monthly EMI: ₹23,601
- Total Repayment in 30 Years: ₹84,96,364 Total Interest Paid: ₹54,96,364
That means you will eventually pay almost double the principal amount in interest alone. While a longer tenure is a boon in cutting down EMIs, the costs of interest escalate enormously.
Key Factors to Consider Before Taking a Home Loan
- Assess Your Financial Stability
- Ensure your monthly income comfortably covers EMI without straining expenses.
- Experts recommend keeping EMI within 40-50% of your monthly income.
- Maintain a Strong CIBIL Score (750+)
- A higher score can help negotiate lower interest rates, saving lakhs over time.
- Fixed vs. Floating Interest Rates
- Fixed rates remain constant but may be slightly higher initially.
- Floating rates fluctuate with market conditions but could be cheaper in the long run.
- Shorter Tenure = Less Interest
- A 20-year loan instead of 30 loan reduces interest significantly, even if EMI increases.