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Summary
EMI is a short form for Equated monthly instalment. The amount which we have to pay every month to lender against Home Loan repayment is EMI. EMI is the Home Loan principal + Interest to be paid, divided by loan duration/tenure. The most important factor to save on Interest component of EMIs is to get the loan at most competitive rate of interest and try to pay loan in the shortest possible loan tenure. Lesser the loan duration means lesser interest payment.
The point to note here is, if borrower have capacity to pay more EMI then should evaluate with banker and take lesser tenure. Normally as an individual we tend to take lower EMI, even when we have capacity to pay more money towards EMI. We think of saving money and then pre-pay at earliest. The above calculation might make re-think as by Paying Rs. 2,461/- per month extra; borrower saves Rs. 4,48,724/- in interest and loan tenure reduced by 10 years.
Idea of taking lesser EMI and saving money to repay home loan earlier, would this have helped borrower save Rs. 4,48,724/- in interest? Might not be possible. Difference in monthly principal deduction is the game changer in calculation.