Installment, markup and total cost on a home loan.
Monthly installment
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Total markup
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Total repayment
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Your breakdown
Updates live as you type
Item
Amount
Worked example
Borrow PKR 20,000,000 at a 20% annual markup rate over a 20-year tenure. The monthly markup rate is 20%
divided by 12, which is about 1.6667%, and the tenure is 240 months. Plugging those into the level
installment formula gives a monthly payment of roughly 339,765. Over 240 months you repay about
81,543,581 in total, of which 20,000,000 is the principal you borrowed and the remaining 61,543,581 is
markup. In other words you pay back more than four times the loan amount over two decades, and markup is
about 75% of everything you hand over. Early installments are mostly markup and later ones mostly
principal, which is why making extra principal payments early shortens the loan sharply. Shortening the
tenure raises the monthly payment but cuts the total markup substantially.
Item
Amount (PKR)
Loan amount
Rs 20,000,000
Monthly installment
Rs 339,765
Number of installments
240
Total markup
Rs 61,543,581
Total repayment
Rs 81,543,581
How it is calculated
A home loan uses a level monthly installment so that the same amount is paid every month for the whole
tenure. The tool converts your annual markup rate into a monthly rate by dividing by twelve, and converts
the tenure into a number of months. It then applies the standard amortisation formula, installment equals
principal times the monthly rate divided by one minus one plus the monthly rate raised to the power of
minus the number of months. Each payment first covers the markup accrued on the outstanding balance for
that month, and the rest reduces principal, so the markup share falls steadily as the balance shrinks.
Total markup is the sum of all installments minus the amount borrowed. A longer tenure lowers the monthly
payment but raises total markup because the balance is carried for longer, while a shorter tenure does the
opposite.
Frequently asked questions
How is a home loan installment calculated in Pakistan?
A home loan uses a level monthly installment found from the loan amount, the monthly markup rate, and the number of months in the tenure. Early installments are mostly markup and later ones mostly principal. The total markup is the sum of all installments less the amount borrowed, which is why a longer tenure lowers the monthly payment but raises total markup.
Why does a 20-year tenure cost so much more total markup than a 10-year tenure?
With a longer tenure the outstanding principal is carried for more months, so markup accrues on the balance for twice as long. On a PKR 20 million loan at 20%, a 10-year tenure keeps total markup under PKR 25 million, while a 20-year tenure pushes it past PKR 61 million. The monthly payment is lower, but the total cost is more than double. Use this calculator to compare tenures and decide which trade-off fits your cash flow.
Do home loan rates in Pakistan float or stay fixed?
Most conventional home loans from Pakistani banks are variable rate, linked to the State Bank of Pakistan policy rate or the KIBOR benchmark, with the markup adjusting periodically, often every three or six months. This calculator uses a fixed rate for the full tenure, so if you have a floating loan the actual installments will change as the benchmark moves. Enter the current rate to see your present installment, then rerun with a higher rate to stress-test affordability.
Can I make early principal payments to reduce total markup on a Pakistani home loan?
Most Pakistani lenders allow partial prepayments, though some charge a penalty for early settlement within the first few years. Every extra payment made against principal directly reduces the outstanding balance, which lowers the markup charged in all future months and shortens the effective tenure. The impact is largest in the early years when the balance is highest. Check your loan agreement for any prepayment charges before making a lump-sum payment.