Effective Interest Rate

Effective interest rate of 2.63% post PMAY & Tax Benefit

Illustration –

House Value(A) – Rs 35,00,000
Home Loan amount (B) – Rs 24,00,000/- ( 70% of the Value)
PMAY Subsidy (C) – Rs 2,30,167/-
Net Loan Amount (B-C) – Rs 21,69,844/-*

Years Opening Loan Principal Interest Payment Principal Repayment
(Prepayment of Rs 1,50,000/- p.a. to maximize tax benefit)
Tax Saved** Net Amount Paid (Net of Tax Saving)
1 21,69,844 1,82,780 1,50,000 1,02,829 2,29,951
2 20,19,844 1,69,521 1,50,000 98,732 2,20,789
3 18,69,844 1,56,263 1,50,000 94,634 2,11,628
4 17,19,844 1,42,004 1,50,000 90,538 2,02,466
5 15,69,844 1,29,746 1,50,000 86,441 1,93,304
6 14,19,844 1,16,487 1,50,000 82,344 1,82,142
7 12,69,844 1,03,228 1,50,000 78,248 1,74,981
8 11,19,844 89,970 1,50,000 74,151 1,65,819
9 9,69,844 76,711 1,50,000 70,054 1,56,657
10 8,19,844 63,452 1,62,513 65,957 1,60,008
11 6,57,332 49,088 1,76,877 61,518 1,64,447
12 4,80,455 33,453 1,92,512 56,687 1,69,278
13 2,87,943 16,437 209,528 51,429 1,74,536
14 78,415 1,474 78,415 24,686 55,203
Total   13,31,614 21,69,844 10,38,249** 24,63,209

(All figures in INR)
*Interest subsidy received from NHB of INR 2,30,156/- is directly deducted from loan amount, thus directly reducing the loan amount to INR 21,69,844.

Heads Amount (INR)
Interest Payment 13,31,614/-
Tax Saved** 10,38,249/-
Payment by customer post tax benefit 2,93,365/-
PMAY Subsidy 2,30,156
Net Payment by Customer 63,209/-
Effective Interest rate for INR 24,00,000/- 2.63%

** Total Tax saving is calculated at 30.90% on Loan amount of INR 21,69,844/-.
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