EMI stands for equated monthly installments, while signing your loan agreement form you would be getting a detailed repayment schedule from the bank that would reflect your monthly payments towards the bank. However, your emi would change with period of time due to unforeseen circumstances. Lets us see various circumstances that would impact your emi in detail –
- Change in rate of interest during tenure of the loan – Interest rates can change during tenure of a loan multiple times. In floating interest loans, your rate of interest can vary between a range of rates. Hence, if you have taken a home loan under floating rate of interest then, your emi might get revised over a period of time. You can take help of online emi calculator to calculate your floating emis.
- Extra payments/ Prepayment of principal amounts – Most banks allows you to prepay your loan in lump sum payments in advance. You can prepay your loan by making remaining payment overdue but it may attract a penalty of 1% to 3% of your remaining principal amount. Partial payment of loans in buckets will impact your emi as it will decrease your amount overdue on the loan.
- Change in loan tenure – You can always negotiate with current lender for a better tenure or you can move to a different lender who can offer you a better tenure. A higher tenure will reduce your emi payments every month and giving you a option to pay loan for a longer tenure.
- Flexible repayment options – There are two types of repayment options available with each loan like a step up option or a step down option. In step up option your emi is lower initially and it will increase over a period of time. In step down option, initially your loan emi is usually higher initially and it will decrease with time. A step up option is good for those customers who are at beginning of their careers and their income can increase over a period of time. It is very easy to calculate your emi in each options with the help of online emi calculator.
An emi is the most important factors considered by a borrower apart from loan tenure and rate of interest. If you are applying for a loan in any bank then, you can take help of online emi calculator available online to calculate your emi for your loan.