Excellent opportunity for Home loan buyers, most of the time after paying EMI for 10 Yrs /20 Yrs, we believe we have paid 50%. That’s not true. When interest rate increases predominantly Banks and NBFCs will increase the tenure that is from 20 years it will become 20 years+++. but EMI will be constant. If rate changes two to three times, you are gone.
Now the complex problem solved, New “Quick Pay Home Loan” from Axis Bank comes with new innovative formula. Your Principle is fixed, hence at 25% of your tenure, you would have repaid 25% of principle which is not possible with traditional Equated Monthly Installment schemes. This Novel idea quick pay home loan gives advantage to customer, enables them to repay the loan in schedule period. Even if interest rate increases, in this method Tenure remains same. So, customer can finish the loan.
In regular EMI method, Interest would be charged for reducing principle. By Quick Pay Home Loan method during Initial Years, you will have higher Interest part and Low Principle part and Vice versa. Because of this arrangement principle is not get reduced 50% when you complete 50% of the tenure/Term. When tenure increases, again it drags more interest repayment.
Your outflow of interest 50L/9.00%/20 Yrs under regular EMI method is 57.96 Lakhs. However, in this new Fixed principle method, even if the rate is calculated at 9.25% instead of 9.00% the net put flow of interest 46.19 Lakhs.