Key Takeaway
One mortgage discount point costs 1% of the loan amount and reduces the interest rate by ~0.25%. On a ₹50 lakh loan, paying ₹50,000 upfront saves ₹807/month , breaking even in 62 months (5.2 years).
Mortgage Point Buy-down Calculator
Determine if paying discount points upfront to reduce interest rate is cost-effective.
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Frequently Asked Questions
What is a mortgage point buydown?
While common in the US, paying 'points' to lower interest rates is rare in India. However, some Indian banks allow you to pay an upfront fee (like a higher processing fee) to secure a slightly lower interest rate for the loan tenure.
Is paying upfront for a lower rate worth it?
It depends on your loan tenure. If you plan to keep the loan for its full 15-20 year tenure, paying an upfront fee for a lower rate usually saves money. If you plan to foreclose in 3-5 years, it is usually a loss.
Does a buydown reduce the principal?
No, buying down the rate only affects the interest component. Your starting principal balance remains the same.
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