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Home Equity Loan Interest Formula:
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The HDFC Home Equity Loan Interest Calculator helps you determine the monthly interest payable on your home equity loan based on the current loan balance and monthly interest rate. This calculation is essential for financial planning and budgeting.
The calculator uses the simple interest formula:
Where:
Explanation: The formula calculates the interest portion of your monthly payment by multiplying the outstanding loan balance by the monthly interest rate.
Details: Understanding your monthly interest payment helps in budgeting, comparing loan options, and making informed decisions about prepayments or refinancing. It also helps you understand how much of your payment goes toward interest versus principal reduction.
Tips: Enter the current loan balance in INR and the monthly interest rate as a decimal (e.g., 0.0083 for 1% monthly rate). Ensure both values are positive and the rate is between 0 and 1.
Q1: How do I convert annual interest rate to monthly?
A: Divide the annual interest rate by 12. For example, 12% annual rate = 12%/12 = 1% monthly = 0.01 decimal.
Q2: Does this calculation include principal repayment?
A: No, this calculates only the interest portion. Your total monthly payment would include both interest and principal components.
Q3: Why is my interest payment decreasing over time?
A: As you pay down the principal balance, the interest calculated on the remaining balance naturally decreases each month.
Q4: Are there any fees included in this calculation?
A: No, this calculation only considers the interest on the principal balance. Additional fees or charges are not included.
Q5: How accurate is this calculator for HDFC loans?
A: This provides a basic interest calculation. For exact payment amounts, consult your HDFC loan agreement or speak with a bank representative.