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 –

1. 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.
2. 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.
3. 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.
4. 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.

Home loan emi is one of the largest burdens on a borrower of a home loan. After paying your home loan emi, you are not left with any surplus funds to invest in other investment options. Power of compounding works in sync with your loan tenure. For a loan with higher loan tenure, your interest payment would also increase with the increase in tenure of your emi.

There are certain methods to reduce interest burden on your home loan. There are two ways to reduce your interest burden on your home loan. One is to reduce interest rates on your home loan. You can always approach another lender to refinance your home loan at lower rate of interest. Second method is to pay your principal amount at faster rate. If you pay your principal amount at faster rate then, there will be less amount on which interest can be charged and it will reduce your interest burden. You can take help of an online emi calculator to calculate impact of early payment on interest reduction.

Let us study following factors which can reduce your interest cost –

1. Pay one more emi per year – You can additionally pay one more emi per year in addition to 12 emi that you have to pay per year on your home loan. You can pay this emi from your annual bonus or variable component of your salary. This additional payment will reduce interest burden on your loan in future.
2. Increase EMI every year – You can increase your emi every year depending on increase in your net salary or income. By doing this, you can repay your loan amount in shorter duration of time.
3. Doing both – You can adopt the practice of doing both activities like paying one more emi per year and increasing your monthly emi to take advantage of both activities in a combined manner.
4. Refinance at lower rates – It is often seen that banks do not pass the benefits of reducing rate of interests to the borrowers. In this case, you can refinance your loan from another lender. A one point reduction in your interest rates can lead to reduction of lakhs in your interest amount of the home loan.

These tips can be utilized in any other loan apart from home loan but, these tips are most advantageous in home loan as you can use the power of compounding to reduce your interest burden over a longer period of time. You can use any online emi calculator to calculate and analyze impact of these steps on interest component of your home loan amount.

Apart from rate of interest and monthly installments (EMI), tenure of a loan is the most important factor considered by a borrower before opting for a loan against property from a bank or financial institution. Most of the banks consider following three important factors before deciding your loan tenure. Let us look at these factors in detail-

1. Your Age – Your age plays an crucial role in deciding EMI for loan against property. If you are in your 20s or 30s then you can go for a higher tenure loans but if you are nearing your retirement then, you have to shorten your loan duration as most of the banks and financial institutions are hesitant in providing loan past retirement age. You can take help of online EMI calculator to assess the impact of shorter loan tenure on your loan As a ground rule, you should always remember that shorter the loan tenure, higher will be EMI you have to pay against loan against property.
2. Your income – Your net income and expenses are one of the most important factors that can and should impact your loan tenure. It is often seen that in eagerness to get a loan against property from a bank, most of the borrowers opt for a loan of shorter durations. A shorter duration loan will result in larger EMI. With time, borrowers are unable to repay back their loan on time and this result in bad impact on their cibil score. There are plenty of online EMI calculator available online that asses your income and expenditure to provide the best loan opportunity with optimal tenures for your profile.
3. Loan amount – A higher loan tenure is usually offered to the loan of ticker size greater than a certain range as it will reduce the burden of payment in short duration of time and it will also uniformly distributes your loan in optimal EMI. Banks usually offers tenure of 5-15 years on loan against property and higher the laon amount, higher will be the tenure of the loan. Online EMI calculator is the best tool to calculate best tenure for your required amount of loan.

Borrowers should always be careful in going ahead with any loan proposal from a bank or financial institutions. They should carefully analyze and try o reach a optimal balance in terms of loan tenure, rate of interest and emi. You can take help of any online emi calculator to reach the optimal balance in your loan proposal.

Q1. What are principal costs?

Ans. Principal Amount is the loan amount which the borrower takes from the lender. The most extrusive cost is the principle, but it can’t be actually considered as a cost of the loan. Meanwhile, if you consider EMIs, the principal amount in the initial periods is less and it gradually increases in the later periods. The best and the fastest way to calculate EMI is an online EMI calculator.

Q2. What are interest rates?

Ans. The main charges that a borrower is concerned about are the interest rates imposed on their home loan. And moreover, because of the loan’s initial phase, the interest rate is the highest and then it keeps on decreasing, it becomes a little over the top for the borrower to cope up with it. Furthermore, the interests also vary, namely, Fixed interest rate and Floating interest rate. Usually the online EMI calculators have interest rates as fixed by default.

Q3. What is fixed interest rate?

Ans. Fixed interest rate on the loan specifies the exact amount of interest being charged throughout the life of the loan. The interest rate is kept fixed for the entire duration. This simply means that the principal and interest payments are same for every timely payment.

Q4. What is floating interest rate?

Ans. In Adjustable/Floating interest rate, initially, the interest rate remains same for a few years and then continues to adjust to the prevailing market rate of interest. This signifies that although the principal and interest payments may vary throughout the life of the loan, but an upper limit is observed on the rise in the interest rate.

Q5. What are origination fees?

Ans. This is the fee that is about 0.5% to 1% proportion of the total mortgage loan. This fee is charged by the money lender for processing the application of a new loan or also described as a compensation or commission for bringing the loan up-front.

Q6. What are Document Retrieval charges?

Ans. After the application of the borrower’s loan, when the borrower submits all important documents, the bank deposits all these further to a central storage unit for safety purposes, called the Central Document Repository (CDR). This process is chargeable to the borrower at the time of total repayment, to transfer the documents from the repository to the borrower.

Q7. What is Memorandum of Deposit of Title Deed (MODC)?

Ans. The document that ensures that the borrower has deposited all the title documents of the mortgaged property by his own will, to the lender is called MODC. For this process, the government levies a stamp duty of 0.1-0.2% of the loan amount to register the document.

Q8. What are legal and technical fees?

Ans. The banks have a team of legal and technical professionals that look after the verification of the borrower’s submitted documents. So the bank charges a sum of fees for these services, but in most the cases it is included in the Origination fees.

There are many costs associated while taking a loan, but half of the conclusion can be concluded by using an online EMI calculator. Make sure you are using a reliable EMI calculator. If you want to calculate your EMI please visit https://loankuber.com/.

Q1. What is the protection given to the lenders if the borrower defaults an EMI payment?

Ans. Each time a bank issues a loan, there is always the possibility that the borrower may default his payments. In order to protect the lender from such problems, there is a legislation called SARFAESI (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act). By this, the lender can seize and sell the mortgaged property to get the full payment of the loan given.

Q2. Are steps taken after 1st default?

Ans. Generally banks do not want to get into a legal hassle and hence ignore the first slip with just a reminder. If you default on your EMI payment thrice, then the bank sends a notice to the person, demanding the payment as soon as possible.

Q3. What are the drawbacks of an EMI default?

Ans. Defaulting on a payment has lots of drawbacks. Not only does defaulting on a loan get the borrower into a legal hassle, but there is also the issue that the credibility for any financial help in the future is also tainted. The amount calculated on the EMI calculators should be paid to the lenders or else there can be bad results.

Q4. Can a borrower restructure his loan after an EMI payment failure?

Ans. If the borrower is unable to pay loans due to some temporary issue such as a sudden job loss, illness due to an accident, etc then he can take the necessary documents and show the banks that the reason for the default was a temporary one. This shows his credibility as a borrower to the banks and helps in convincing them about his ability to pay the loan. An EMI can be perfectly planned with the help of an EMI calculator.

Q5. Can the borrower pay the payments partly?

Ans. Sometimes either the EMI increases due to interest rate increase or it may happen that the borrower’s income level has fallen, both of which leads to the increase in the EMI payment. It may prove to be difficult for the borrower to pay the loan. In such matters, one can approach the bank and extend the loan tenure, allowing the EMI to fall. For those who are nearing their retirement, this option is unlikely.

Q6. Can I liquidate my other investments?

Ans. At times, a borrower may face the problem of not having regular cash flow while having sufficient investments in the banks to pay your loan. In such a scenario, one can liquidate his assets to pay his EMI.

Q7. Can I dispose my property to pay for the EMIs?

Ans. If there is no other option that the borrower has, then disposing of the property is the last measure that can be taken. For this, he needs to sit down with the bank officials and discuss the sale of the property. The sale of the property should be taken up such that the maximum price can be availed.

It is immensely important to plan your EMI first and this can be perfectly done with the help of an EMI calculator. EMI calculators is accessible online on various website and also on loankuber.