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Formula to Calculate the Periodic Payments under RML
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The formula to calculate the periodic payments, as available in the website of NHB, is as under:
Installment Amount = (PV*LTVR*I)/ ((1+I)n-1) Where,
PV = Property Value;
LTVR = LTV Ratio;
n = No. of Installment Payments;
I = the value of I will depend on Disbursement Frequency selected.
A Hypothetical Example
Value of the property Rs. 50,00,000 Rs 50,00,000
Loan Amount 80% 90%
Loan Tenor 15 years 15 years
Rate of interest 10% 10.50%
Monthly installment Rs. 9651. Rs 10,368
Quarterly installment Rs. 29,414. Rs 31,638
Yearly installment Rs. 1,25, 895 Rs 1,36,116
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Sinking Fund
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The sinking fund factor is the amount that accumulates to Re. 1 if invested at specified rate of interest for certain number of years.
It can be obtained from Valuation Tables.
The factor for redemption of Re 1 at the end of 25 years @ 5% compound interest is 0.021 from the table (see Appendix given in book).
Thus the sinking fund for redeeming original capital of Rs. 15 lacs will be 15,00,000 x 0.021 = 315000.
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