Home Loan Tips: How You Can Save ₹24 Lakh & 5 Years While Paying Less Money

When taking a home loan, most people aim for the lowest EMI possible to reduce the strain on their monthly budget. However, according to financial experts, tweaking your EMI just slightly could help you save lakhs of rupees in interest and also cut several years off your loan term. For example, if you’ve taken a loan of ₹60 lakh over 30 years, you might be able to save over ₹24 lakh and 5 years simply by increasing your EMI by a modest amount. Here’s how the numbers work out and why this strategy might be worth considering.

The Standard Loan Setup

Let’s say you've taken a home loan of ₹60 lakh with an interest rate of 9.5% per annum for a tenure of 30 years. Under this setup, your estimated monthly EMI will be around ₹50,451. Over the course of the loan, you’ll end up repaying a total of ₹1.81 crore, which includes approximately ₹1.21 crore in interest alone.

While a longer tenure offers smaller EMIs, it results in a significantly higher overall repayment amount due to the prolonged interest burden. It’s the default choice for many borrowers, but not always the most cost-effective one.

Understanding the 25-Year Tenure Option

Now imagine choosing a slightly shorter tenure of 25 years instead of 30. In this scenario, your EMI will rise slightly to around ₹52,422—a monthly increase of just ₹1,971. This small adjustment leads to a massive difference in the overall interest paid.

With this revised tenure, your total interest comes down to an estimated ₹97.26 lakh. The total repayment amount becomes roughly ₹1.57 crore, meaning you save about ₹24.36 lakh just by cutting 5 years off the loan term and adding a bit more to your EMI.

EMI and Interest Comparison at a Glance

• Loan Amount: ₹60 lakh
  
  
• Interest Rate: 9.5% per annum
  
  
• 30-Year EMI: ₹50,451
  
  
• 30-Year Total Repayment: ₹1.81 crore

30-Year Interest Paid: ₹1.21 crore

Vs

• 25-Year EMI: ₹52,422
  
  
• 25-Year Total Repayment: ₹1.57 crore
  
  
• 25-Year Interest Paid: ₹97.26 lakh

Savings:

• Money Saved: ₹24.36 lakh
  
  
• Time Saved: 5 years
  
  

Why Opting for a Shorter Tenure Can Be Smart

Many borrowers assume that a higher EMI is automatically unaffordable or risky. However, financial experts argue that even a slight increase in EMI, if manageable, can substantially reduce the total cost of the loan. A shorter tenure means fewer interest cycles, leading to less interest paid overall.

In addition, closing your home loan earlier allows you to reallocate your income towards other goals such as children’s education, retirement planning, or wealth creation through investments. Financial freedom comes sooner, and the psychological comfort of being debt-free earlier is an added bonus.

The Role of Discipline in Loan Repayment

One key factor in making this strategy work is financial discipline. Borrowers must plan their monthly expenses carefully to accommodate the slightly increased EMI. Experts advise using a home loan EMI calculator before finalising the loan plan and making sure that the new EMI amount fits within 40–45% of your monthly income.

Additionally, one could consider making occasional lump sum repayments (known as prepayments) to further reduce the loan burden. These payments help bring down the principal, resulting in less interest over time.

The Long-Term Financial Benefits

In the grand scheme of a 25- or 30-year financial plan, saving ₹24 lakh is no small achievement. This amount, if invested wisely after the loan is repaid, can further generate returns and add to your wealth. Moreover, clearing your loan 5 years earlier opens up opportunities to channel funds into other long-term investments.

Pay More Now, Save Big Later

While it may feel safer to commit to a lower EMI with a longer tenure, the long-term cost of that convenience can be high. If your finances allow it, a small step like increasing your EMI by just ₹1,971 could save you over ₹24 lakh and free you from debt five years earlier. It's a classic case of short-term effort for long-term reward.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Home loans are subject to approval and market conditions. Please consult a certified financial advisor or banking professional before making loan-related decisions. All estimates mentioned are based on assumed interest rates and may vary in real scenarios.