I have taken a house loan of Rs.22.00lacs on Dec-2010 for 15yrs tenure @EMI Rs. 23600.00 on floating interest. But after some time, I increase the EMI amount to Rs. 40000.00. My question is whether this is good practice to reduce the interest as well as period or I have to accumulate a lumsum amount {difference of (Rs 40000-23600)x12} throughout the year and choose the prepayment option ?
No doubt whenever you prepay a part of interest bearing principal interest outgo will reduce. No rocket science in this. There is a factual error in the article when writer says "that returns on Rs 3 lacs invested for 4 years in scenario 2 will not be anywhere close to the amount of interest saving. It has to be since investment return for 4 years is being compared with saving in interest for 19 years. No doubt a good article for less initiated but these kind of inaccuracies should be avoided and such article should be vetted by expert like CAs before being uploaded.
