Tuesday, June 13, 2017

Home Loan...



This is the % of interest paid for a 20 years housing loan over the period.
1) By the 5th year 35% interest is paid,
2) By the 10th yr 66% interest is paid
3) By the 12th year 75% interest is paid.
For a 1 cr loan at 10% interest is not 10 lac which is the interest amount but a whopping Rs 1.7 cr.
After 7th year paying off the loan is an exercise in futility.
Most people do so; pre-pay and smile to themselves even whilst the bankers laugh all the way to their bank and banks.
Banks make a killing out of this tendency of pre-paying of loans.
As an investor invest in bank stocks till such time people are ignorant and take long term loans but as a borrower never ppre-pay after 7 years have passed.
The irony is there was a time when banks charged prepayment fee.
This is business of the Banks.
Ethics Gaya tel Lene
Another interesting aspect is that for a 1 cr loan at 10% the interest isn't Rs 10 lac but a whopping Rs 1.7 cr which is 170%.

No comments:

Post a Comment

Featured Post

Financial Advisor ka follow rule

Bull na kar jaaye humko fool Financial Advisor ka follow rule Bear nahin hoga market se gull Financial Advisor ka follow rule Agar rehn...