Interest-Free Home Loan: Pay Zero Interest on a ₹45 Lakh Home Loan with This Trick and Save Lakhs

Most people worry about paying hefty interest on their home loans. Even if the interest rate is low, in the long term, the total interest on a home loan can exceed the principal amount.

Interest Free Home Loan: A home is the biggest purchase in any individual's life. With prices soaring, people often have to take out a home loan to buy a house. While home loans have low interest rates, customers end up paying a substantial amount of interest in the long run. In most cases, the interest amount exceeds the principal. Therefore, financial experts advise making the largest possible down payment to reduce the overall interest cost.

Today, we will share a trick that will completely offset the interest you pay on your home loan. By the time your home loan tenure ends, you will have recovered the entire amount paid as interest, effectively making your home loan interest-free. Let's first look at the interest rates offered by banks on home loans.

Home Loan Interest Rates

Following significant cuts in the repo rate by the Reserve Bank of India this year, banks have considerably reduced their home loan interest rates. Central Bank of India is offering home loans at a minimum interest rate of 7.35%. This bank charges a processing fee of 0.50% of the loan amount plus GST. Bank of Maharashtra also has an initial interest rate of 7.35% on home loans, with a processing fee of 0.25% of the loan amount plus GST. Indian Overseas Bank is also providing home loans at a minimum interest rate of 7.35%, with a processing fee of 0.50% of the loan amount. Canara Bank is offering home loans at a minimum interest rate of 7.40%, with a processing fee of 0.50%. Additionally, UCO Bank has a minimum interest rate of 7.40% on home loans, with a processing fee of 0.50% of the loan amount.

Bank Name	Minimum Interest Rate (%)	Processing Fee
Central Bank of India	7.35	0.50% of Loan Amount
Bank of Maharashtra	7.35	0.25% of Loan Amount
Indian Overseas Bank	7.35	0.50% of Loan Amount
Canara Bank	7.40	0.50% of Loan Amount
UCO Bank	7.40	0.50% of Loan Amount

EMI for a ₹45 Lakh Home Loan

If you take a home loan of ₹45 lakh at an interest rate of 7.35% for 30 years, your monthly EMI will be ₹31,004. Over the tenure of this loan, you will pay a total interest of ₹66,61,348. If you take this loan for 25 years, the monthly EMI will be ₹32,817, and the total interest paid will be ₹53,45,037. If you opt for a 20-year tenure, the monthly EMI will be ₹35,840, with a total interest payment of ₹41,01,619.

Loan Tenure (Years)	Interest Rate (%)	Loan Amount (₹)	Monthly EMI (₹)	Total Interest (₹)	Total Payment (₹)
30 Years	7.35	45,00,000	31,004	66,61,348	1,11,61,348
25 Years	7.35	45,00,000	32,817	53,45,037	98,45,037
20 Years	7.35	45,00,000	35,840	41,01,619	86,01,619

How to Make a ₹45 Lakh Loan Interest-Free?

From the day you take out your home loan, start a Systematic Investment Plan (SIP) in a mutual fund with a very small amount. If you take a ₹45 lakh home loan at a 7.35% interest rate for 30 years, simultaneously start a ₹2,500 monthly SIP. This SIP amount is very small compared to your loan EMI, so it won't add significant burden.

Details	Amount / Figures
Monthly SIP Amount	₹2,500
Investment Tenure	30 Years
Total Investment Amount	₹9,00,000
Average Annual Return (CAGR)	12%
Maturity Amount	₹77,02,433
Total Interest (Profit)	₹68,02,433

Continue this SIP for the entire loan tenure of 30 years. With an average annual return of 12%, you will accumulate a fund of ₹77,02,433 at maturity. This includes your investment of ₹9 lakh and an interest earning of ₹68,02,433. On the other hand, during this period, you will pay a total interest of ₹66,61,348 on your home loan, which is less than the interest earned from your SIP. This way, your home loan will become interest-free, and you will also have surplus funds.