How much interest are you paying for your bank loan?

For those who are interested to know the breakdown of your monthly bank loan. Here’s a chart which gives you the interest rate paid over time. There are 3 lines representing 15yrs loan, 20yrs loan and 30yrs loan. (See thumbnail).

The longer the loan tenure, the % as interest going to bank monthly can be a shock to many especially in the first few years. The interest to bank decreases year by year as the principal also reduces. This means that you are paying more towards the principal instead of interest to bank.

Using the example of $700k as condo price and loan of 80% which is $560k (2% interest rate), total $ paid and total interest paid at the end of the tenure are as below.

15 yrs loan: Total $ paid is $648k of which $88k is interest (15.7% of $ loan)
20 yrs loan: Total $ paid is $680k of which $120k is interest (21.4% of $ loan)
30 yrs loan: Total $ paid is $743k of which $185k is interest (33% of $ loan)

Note that 2% interest rate doesn’t mean that you pay 2% of $560k = $11.2k. As you are only paying a fraction of the principal monthly, at the end of the loan period, you are paying between 15 to 33 % of the loan amount as can be seen from the computation above.

Can you imagine how much interest you are paying if you buy a $1million dollar property?