Home Loan EMI (Equated Monthly Instalment), is a fixed amount paid by a borrower to a lender on a specified date each month, towards repayment of a loan. It comprises the principal amount and the interest. Using an EMI calculator can help individuals anticipate and plan for their monthly repayment obligations, thereby assisting in budgeting and financial management.
Borrowers start paying their EMIs on the principal amount once the full loan amount is disbursed. The exact timing can vary based on a few different scenarios:
Partial Disbursement: If the loan is disbursed in stages (common in the case of under-construction properties), the EMIs start once the final disbursement is made. Until then, you might only need to pay pre-EMI interest, which is the interest on the disbursed amount. The pre-EMI comprises of only the interest tallied on the principal amount and not a combination of both. Loan for Ready-to-Move Property: For a ready-to-move property, where the full loan amount is disbursed at once, EMIs generally start from the month after disbursement, depending on the disbursement date.
Borrowers are advised to keep up with their EMI payments to avoid defaulting on their Loans. This can be achieved by planning finances. For planning purposes, they can make use of online tools, such as the Home Loan EMI Calculator.
Your final EMI amount is determined considering the following factors:
- Your Home Loan Amount: Your Home Loan amount or the principal amount is the basis on which the EMI payments are decided, as one of the two components of the EMI is the principal amount.
- Your Home Loan Interest Rate: The rate of interest at which you borrow the Home Loan also factors into your EMI account, as the second component of the payment is the interest accrued on your principal amount.
- Your Home Loan Repayment Tenor: How long it takes to repay the loan decides the size of the EMI; if you choose a short repayment tenor, you end up paying a higher EMI amount but save on interest outflow. On the other hand, a longer repayment tenor ensures small EMIs, but for a longer duration – increasing your total cost of borrowing.
The final EMI amount is calculated based on all the factors listed above. Before you make your Home Loan application, you can use the Home Loan EMI Calculator to get a tentative idea of how much you may have to pay as an EMI. The amount is calculated based on the inputs provided by you, such as your desired loan amount, interest rate and preferred repayment tenor.
Also Read: Know How to Calculate Home Loan EMIs
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