Home loan perils


Active Member
Hello members:

My friend had taken a home loan in 2003 of Rs. 4,25,000 at 10.25% floating interest. His EMI was around Rs. 4300/- for 15 years. His loan was scheduled to end at 2018.

Last year, the bank (StanChart) had increased the rate to 13.9%. Didnt give any intimation to him. Yesterday when he went to check his loan details, he was told the loan period has been extended until 2031 (13 years extra) due to the interest hike.

After some argument, he has increased his EMI to 6200/- and guess what the loan will be over in around 9 years.

The best way to reduce the interest paid in home loan or reduce the EMI would be to pay some extra amount at the end of the year to the bank. That amount will be deducted from principal and the interest is reduced. Plan to pay around 50,000 - 1,00,000 in addition to the regular EMI, or else there will be no end.

Maybe a CA or some other experts in this forum can explain this better and advice all the members how to handle home loans so that we dont pay even after we retire.

Members, please check with your banks regularly on the loan tenure, ROI, EMI.

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