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With many different types of banks as well as financial institutions offering various options for home buyers to finance the acquisition of their property, there are also a number of factors which are known to universally affect the Equated Monthly Installments (E.M.I.'s) that are paid every month. With options available to meet different budgets as well as requirements of people it is very important to first understand the constituent of these loans – the E.M.I.'s- the Equated Monthly Installments. An Equated Monthly Installment (E.M.I.) is known as the amount of money that is payable to the bank (loan provider) on a monthly basis so as to acquire legal possession of the house/property. Usually, a date is fixed every month whereby the borrower pays the lender a fixed amount so as to clear the outstanding amount that has been borrowed. This amount is paid for the entire duration of the loan, until the outstanding amount has been complete repaid by the borrower. This amount is broken down into two components: the principal and the interest. As the person repays the loan amount along with the interest amount, the interest component is known to become lower than the principal, ultimately becoming minimal. However, the EMI remains a constant amount for each month, in most cases. Home loan EMI calculator allows you to calculate EMI (Equated Monthly Installment) for your loan amount. Use our easy to use EMI calculator for any home loans. There are four major factors on which the E.M.I. of your home loan is determined by. These include: 1. Principal Amount: This amount refers to the actual amount that is borrowed by the lender. It is one of the major determining factors which determined the E.M.I. amount that has to be paid. 2. Rate of Interest: Different banks/financial institutions or organizations charge different rates of interest for the loans that they give. The rates of interest are usually higher for high loan amounts and lower for smaller loan amounts. It is very important to do a market study to compare different interest rates which are offered by different lending bodies before deciding which one to opt for. 3. Loan Tenure: The period with which the loan (tenure) is taken is a strong determinant in the E.M.I. that has to be paid. Usually longer duration have lower monthly payments whereas shorter periods have higher monthly installments. 4. Method of Computation: The method by which a person calculates their E.M.I. amount is very important. Some of the different methods include annual reducing rate, monthly reducing rate and daily reducing rate. They are generally calculated using a specific formula. For instance, the EMI (the loan amount x Interest) x (1 interest) to the power of N/ [(1interest) to the power of N]-1. Here, the interest = (% rate)/12; N = loan tenure Housing loan rates differ according to the loan provider as well as the above mentioned factors. There are also E.M.I.'s which are planned according to the expected rise /increase or decrease in salary of the borrower. This is known as step up and step down E.M.I. There are also cases when the borrower may also opt for a partial disbursement of their home loan on the basis of different stages of the construction of their house. This is known as the pre- E.M.I. and advance disbursements. These monthly installments can be calculated using either a fixed or floating rate of interest.
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Home loan, housing loan, housing finance, emi calculator,
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