Loans

How to think about a loan before borrowing

Start with three numbers: the loan amount you actually need, the rate the bank is offering, and the shortest tenure your monthly budget can carry without breaking. The EMI calculator gives you the monthly outflow, and the amortization table shows how much of every EMI is interest versus principal in any given year. Year-1 EMIs are almost all interest; by year 12-15 of a 20-year home loan the split flips.

Tenure is the lever most first-time borrowers misuse. Stretching a ₹50 lakh home loan from 20 to 30 years cuts the EMI by about ₹4,800/month but adds roughly ₹37 lakh of interest to the lifetime cost. The "lower EMI, longer tenure" pitch from a relationship manager is a sales pitch, not a financial recommendation. If your budget allows the higher EMI, take the shorter tenure.

When prepayment beats investing

Floating-rate home loans taken by individuals carry zero prepayment penalty under RBI rules since 2014. Every rupee you prepay knocks off interest at your loan rate, with certainty. Compare that against the post-tax return you can realistically earn from a SIP or lumpsum investment. For someone in the 31.2% slab paying 9% interest on a self-occupied home loan (effective ~6.2% after the Section 24 deduction), prepaying beats most realistic mutual-fund returns over short horizons. Over 15+ years, the equity SIP usually wins. Run both calculators side by side.

Tax on home loans (old regime only)

Section 24 lets you deduct up to ₹2,00,000 of home loan interest per year on a self-occupied property, but only under the old tax regime. Section 80C covers the principal portion up to ₹1.5 lakh — usually already filled by EPF and PPF. Section 80EE adds ₹50,000 for first-time buyers when conditions are met. The new tax regime drops all three for self-occupied homes, which is why high-interest borrowers often still stay on the old regime.