Next Level Education | Pinch of interest
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Pinch of interest

Pinch of interest

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 paid3) 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 LeneAnother 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%.

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