Harried prospective home buyers often huddle at the banks and housing finance institutions that provide them attractive home loan packages at easy terms and conditions. Customers may often get lured by the promises made by the banks and deals offered by them. However, one should always thoroughly go through the nitty-gritties of home finance packages in order to foresee the pitfalls in their journey of home loan and avoid them carefully.
Certain things can impact the EMI that one has to pay every month as a part of their loan repayment. Although EMI stands for Equated Monthly Installments, it does not mean that it will never change. When availing the loan, you estimate your EMI by taking into account a fixed loan amount with fixed rate of interest for fixed loan tenure. However situation can change over time and many factors could alter your EMI amount.
There can be a situation where one may have to deal with unexpected changes in the interest rate of the loan taken, thus impacting the equated monthly installments that one has to pay every month. Such changes in the interest rate may be attributed to changes in the base rate by the RBI. Moreover, in cases where borrower feels like repaying the loan ahead of the schedule, the banks may charge a certain percentage of the outstanding principle amount as pre-payment penalty.
Although such a prepayment penalty is abolished by the RBI, there may be other charges related to the same that may impact the EMI and make the customer re-calculate and adjust his budget. Change in loan tenure can be yet another factor impacting Home Loan EMI. The longer the tenure of the loan, the lesser will be your monthly EMI payment. Shorter tenures mean greater EMI burden, but your loan is repaid faster. Longer tenures mean payment of larger interest towards the loan and make it more expensive. Also, a loan with flexible repayment options can alter the EMIs for good!
Link Partner
It’s important to have Public Liability Insurance cover for your business to get rid of unexpected financial losses. Click here to compare quotes from various insurance providers!!
