Best Time for Part Payment of Home Loan

Posted in Housing Articles By Sateesh Kalla - Jul 11,2019
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Part-payment of a home loan is a way to reduce the burden of the loan component. If we observe and understand the loan repayment schedule, the best time for part payment is one which will reduce outflow from the customer pocket. The best time for part payment of the loan can, therefore, be as early as after your 1st EMI.  Let’s consider a small illustration which will explain the part payment of Rs 1 lakh after 12, 24 & 36 EMIs:

Illustration

Part-payment time After 12 EMIs After 24 EMIs After 36 EMIs After 120 EMIs After 200 EMIs
Part-payment amount 1 lakh 1 lakh 1 lakh 1 lakh 1 lakh
           
Loan amount 25 lakhs 25 lakhs 25 lakhs 25 lakhs 25 lakhs
ROI 8.8% 8.8% 8.8% 8.8% 8.8%
Tenor 20 yrs 20 yrs 20 yrs 20 yrs 20 yrs
EMI 22173/- 22173/- 22173/- 22173/- 22173/-
           
Reduced EMI 23 EMIs 20 EMIs 18 EMIs 10 EMIs 7 EMIs
EMI Outflow impact 5.09 lakhs 4.43 lakhs 3.99 lakhs 2.21 lakhs 1.55 lakhs
EMI Outflow Savings 4.09 lakhs 3.43 lakhs 2.99 lakhs 1.21 lakhs 0.55 lakhs

As per the above illustration, if Rs 1 lakh part payment is made after 12 EMIs, an outflow of 5.09 lakhs will be reduced and 4 lakhs outflow from the customer pocket will be saved. You can always make use of the Bajaj Finserv home loan EMI calculator from Bajaj Markets to help you with these calculations.

 

Home Loan EMI Calculator

It is always advisable to part pay as early as possible, especially when the principal component is high in EMI. As the tenor of the loan increases, the principal component decreases in the EMI, so the savings benefit will also drop considerably.

 

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