Purchasing a home is a dream for many Indians, and an Indian home loan is generally what makes this dream a reality. Receiving a home loan is indeed a significant achievement, however the real challenge awaits you in the form of home loan EMIs payment which is a long-term commitment requiring meticulous planning and discipline. At Today Finserv Consulting India, we aim at enhancing self-sufficiency through imparting relevant information concerning EMIs management with our clients.
What is a Home Loan EMI?
Home loan EMIs or Equated Monthly Installments refer to fixed monthly payment made by the borrower of a home loan due to the lender and payment is made on a monthly basis.
Home loan EMIs are further divided into 2 parts:
Principal – The total amount of money given out.
Interest – The amount charged by the bank based on the principal amount.
As the loan matures, the interest component will decrease while the principal component will increase. This is because home loans typically use the reducing balance method.
How is EMI Calculated?
Home loan EMIs are calculated using a formula:
EMI = [P x R x(1 + R)^N] / [(1 + R)^N – 1]
Where:
P = Principal loan amount
R = The interest rate of the loan per month ( Annual/ 12 / 100)
N = Number of installments (loan term) in months
Example:
If a borrower takes a loan of ₹50 lakh for 20 years at 8.5% interest, the EMI will be just over ₹43,000.
At Today Finserv Consulting India, we provide a free EMI calculator for home loans to enable better financial planning.
When Do EMI Payments Begin?
Normally, payment of the EMI starts after the borrower receives the full loan amount. In the case of under-construction properties, the borrower may have the option to begin Pre-EMIs -which means they will only pay interest on the amount given until their loan is fully released.
Agreements for regular EMI payments start upon the full release of the funds or possession of the property.
Modes of Home Loan EMI Payment
Financial Institutions and Banks have put in place several seamless payment methods for one’s convenience including:
Auto-Debit/ECS (Electronic Clearing Service)
Your bank account will be charged monthly on the same date that has been predetermined with the respective financial institution.
Advantages:
Convenience
No missed or late payments
Efficient use of time
PDC (Post-Dated Cheques)
Some lenders accept Post-Dated Cheques to be cashed for a defined duration of the semester’s worth of advance payments.
Note: This form of payment is being replaced by more advanced methods.
Online Payments/Net Banking
Payments can be processed through the financial institution’s website portal as well as through traditional bank account websites.
UPI/Mobile Applications
With the advancement of technology, a lot of mobile wallet companies and credit/ debit card applications are accepting these payments.
At Today Finserv Consulting India, we aid you in MAXIMUM payment efficiency by completely setting up a system where reminders toward monthly values are automated.
Payment under Home Loan EMIs
Lending Institution correlate the respective divisions to be paid to the provided payment discipline, and they will calculate for you the amortization table which includes:
Amount relative to payment each month,
Segregation of principal and interest portion through which each payment is made,
The remaining amount that one has to pay each month after these payments called outstanding dues.
Using this system allows one to keep track of the progress against plan and take steps toward paying off debts that are not needed in advance.
What Happens If You Forget to Complete an EMI Payment?
- Penalties or late fees for payment overdue
- Diminished credit score impact (CIBIL)
- Increased burden of interest
- In severe instances, legal action may be pursued
Of the numerous consequences arising from failing to pay an EMI on time, the most notable one is reduced creditworthiness. This can have severe implications on one’s eligibility for credit in the future.
Tip: Most lenders allow for payment deferment or partial payment, provided they are informed in good time. One way to preempt these issues is to notify the lender ahead of time.
Prepayment and part payment of EMIs Based on Financial Status
Reduction of interest costs and mileage-free driving create a win-win situation. This is one of the reasons why partial loan payment and debt forgiveness are appealing. Other advantages include:
✅ Sooner retirement than anticipated
✅ Reduction of outstanding balance
Effective Tips for Reducing Payments on the Reverse Mortgage Loan
Use The Right Plan
With a home equity loan, EMIs become mandatory and the borrower must repay the funds in fixed monthly payments. This results in added interest. The opposite occurs for short term loans. The opposite occurs when you repay a home equity loan or EMIs. More than one option exists for managing your finances for housing loans, and striking a balance is key.
Integrate Automatic Payments
Always maintain a sufficient balance so that you don’t miss any payments, which can be done through auto-debit, setting calendar reminders, or manual payment verification.
Keep an Eye on Your Loans
The ability to review conditions (at least to a certain extent) should be frequent since interest rates can change from one period to the next. Doing this can allow you to shift to better rates via balance transfer or renegotiation.
Make Regular Plans for Repayments
Other streams of income like bonuses or tax refunds provide a golden opportunity to be pre-paid, thus relieving a considerable amount of interest related burden.
Rely on EMI Calculators
Changing tenure and interest are factors that can be simulated using tools, allowing you to draft a realistic plan months or years before implementing it.
Ave Foth Elderly Relatives
By taking a home loan protection plan, you can protect your family from liability. This shields them from the outstanding EMIs in the event of death, and disability, or job loss.
What You Can Do When Experiencing Problems With Making EMI Payments?
A job loss, illness, or an economic downturn can suddenly change life’s course and make making EMI payments challenging. Here’s how to ease the burden:
Proactive Communication With Your Lender
Seeking assistance earlier rather waiting until the last minute can be extremely beneficial. They might restructure your loan or offer a temporary suspension of payment.
Loan Restructuring
Negotiation with lenders might allow extending the loan tenure, reducing the amount of the EMI, or paying off some to lessen the debt directly, as per RBI rules.
Professional Consultation
With the help of a professional, devising alternative ways to pay off sent yo their lenders can offer flexibility around repayment and even negotiate with lenders quite easily.
Our specialists give guidance to every self-employed worker, salaried professionals, or even a home buyer for the first time, offering support throughout the entire process.
Conclusion
Remitting your loan EMI is an integral part of your financial plan. To meet your savings objectives and not end up financially strained due to the loan, discipline, planning, and at times, professional assistance is necessary.
Today Finserv Taiwan integrates all the appropriate methods, ideas, and guidance necessary to ensure paying your EMIs is an effortless, uncomplicated task that doesn’t add layers of stress to your day. Our services guarantee you don’t simply get a loan, you also enjoy the mastery of repaying it.
