EMI is the amount you will pay to bank on a specific date each month till the loan is repaid in full.
The EMI comprises of the principal and interest components. These components are designed in such a way that the interest component is much larger than the principal component during the initial years of your loan, while the principal component is much larger than the interest component during the later years of the loan.
You can use our EMI calculator to find out your monthly payments based on the loan amount, the rate of interest and the repayment period.
Majorly, 2 types of interest rate offered on home loans, which are-
Fixed Interest Rate- Fixed rate of interest means the rate of interest remains unchanged for some initial years but not during the entire duration of the loan. This means one does not benefit even if home loan interest rates drop in the market during the tenure of his/her loan. It provides safety from Fluctuations for a predetermined period of time. The fixed rate remains fixed only for initial 3 year to 10 year terms, after that the interest rate automatically gets converted into the floating rate prevailing at that time.
Floating Interest Rate- Floating rate of interest fluctuates with the market lending rate. This means one has the risk of paying more than he/she budgeted for, in case the lending rate goes up. One needs to pay lower EMI when rates fall.
It depends upon the borrower to decide which option to choose based on what suits him/her the best.
When you buy any house property, banks extend home loan of around 70% to 80% of the property's value. The balance amount has to be arranged by the borrower himself. Down Payment is a fraction of the value of your home that you have to pay on your own i.e. out of your own pocket and rest of the amount is funded as home loan by the lender. Down payment is indispensable for a home loan. For example, suppose if you buy a house worth Rs. 50 lakhs and bank approves a home loan of Rs 40 lakhs which is 80% of the value of the property so you need to pay remaining 20% as the down payment (margin) on your own.
When your loan is sanctioned, you will get a loan offer letter comprising following details:
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