Factors that Impact Your Home Loan EMI Calculation
Oct 26, 2017 Home Loan
Before taking a home loan you think about EMI. You tend to calculate EMI first to ensure the amount of loan you want to apply for while deciding your capability to handle the loan burden. The EMI is usually calculated considering the loan amount, its duration and the rate of interest. But the EMI value can get changed with the course of time and many factors influence the EMI.
Change in the home loan period: whenever the home loan tenure gets change, the EMI amount also gets to change. The longer is the home loan duration, less is your home loan EMI and shorter is the home loan tenure, more is your EMI. But longer tenure also means more interest payment while increasing the cost of credit.
Change in interest rate: the lending rates in the market may get change with the change in policies and regulations issued by Reserve Bank of India (RBI). So, if you have a home loan with floating rate of interest then the change in interest rates can impact your home loan EMI. It can affect positively or negatively or might not have any impact. But if you have fixed rate of interest then also you can request your lender if you want any change in the tenure.
Pre-paying principal home loan amount: you can pre pay your home loan by making some extra payment. Every home loan providers offer pre-payment option. This step lowers the principal amount and hence lessens the interest burden as well. Do check the pre- payment charges with the lender or bank from where you are taking the loan before pre paying the loan amount.
Step-up or step-down repayment method: based on the income volume, home loan borrowers can choose repayment options for their home loan. Such as, if you are beginning your career your income tends to rise, so step-up repayment method will be convenient for you. Whereas, step-down repayment method is suitable for those borrowers who are close to retirement.
Opting a new lender: home loan EMIs also changes with the Balance Transfer method, wherein you move your home loan to a new lender. This is a common practice that borrowers choose, also to get advantages of the lower interest rates. In many cases, borrowers also choose top-up loans on balance transfer that tends to change the home loan EMI as well
Change in the home loan period: whenever the home loan tenure gets change, the EMI amount also gets to change. The longer is the home loan duration, less is your home loan EMI and shorter is the home loan tenure, more is your EMI. But longer tenure also means more interest payment while increasing the cost of credit.
Change in interest rate: the lending rates in the market may get change with the change in policies and regulations issued by Reserve Bank of India (RBI). So, if you have a home loan with floating rate of interest then the change in interest rates can impact your home loan EMI. It can affect positively or negatively or might not have any impact. But if you have fixed rate of interest then also you can request your lender if you want any change in the tenure.
Pre-paying principal home loan amount: you can pre pay your home loan by making some extra payment. Every home loan providers offer pre-payment option. This step lowers the principal amount and hence lessens the interest burden as well. Do check the pre- payment charges with the lender or bank from where you are taking the loan before pre paying the loan amount.
Step-up or step-down repayment method: based on the income volume, home loan borrowers can choose repayment options for their home loan. Such as, if you are beginning your career your income tends to rise, so step-up repayment method will be convenient for you. Whereas, step-down repayment method is suitable for those borrowers who are close to retirement.
Opting a new lender: home loan EMIs also changes with the Balance Transfer method, wherein you move your home loan to a new lender. This is a common practice that borrowers choose, also to get advantages of the lower interest rates. In many cases, borrowers also choose top-up loans on balance transfer that tends to change the home loan EMI as well
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