An EMI (Equated Monthly Installment) is a fixed payment amount made by a borrower to a lender on a specified date every month. For home loans, it covers both the principal amount and the interest accrued over the loan tenure.
When does the repayment start?
Repayment of a home loan typically starts: After the full loan amount is disbursed.In cases of under-construction properties, you may pay Pre-EMI (interest only) during the construction phase, with full EMI starting post-completion or final disbursement.
What is the tenure of a home loan?
The tenure of a home loan usually ranges from 5 to 30 years, depending on the borrower’s preference and eligibility. Opting for a longer tenure reduces monthly EMIs but increases the total interest paid.
What is the Eligibility Criteria for a Home Loan?
The eligibility criteria for a home loan typically include:
Income: Proof of stable income (salaried or self-employed).
Age: Usually 21–65 years.
Credit Score: A good credit score (750 or above is preferred).
Employment: Minimum work experience (varies by lender).
Property Documents: Clear legal and ownership status of the property.
Are there tax benefits on home loan EMIs?
Yes, you can claim tax benefits under the Income Tax Act:
Section 80C: Deduction of up to ₹1.5 lakh on principal repayment.
Section 24(b): Deduction of up to ₹2 lakh on interest paid for self-occupied properties.
What happens if I miss an EMI payment?
Missing an EMI payment can lead to:
Late payment penalties or additional charges.
A drop in your credit score, affecting future loan approvals.
Risk of legal action or loan default in case of prolonged non-payment.
It is advisable to inform the lender and seek solutions like loan restructuring in case of financial difficulties.
What is the difference between EMI and Pre-EMI?
EMI: A fixed monthly payment covering both principal and interest, starting after full loan disbursement.
Pre-EMI: Interest-only payments made during the construction phase or until the full loan amount is disbursed.
Pre-EMI is applicable for under-construction properties or staggered disbursements.
How do I repay my home loan?
Home loans are repaid through EMIs, which can be set up as:Auto-debit Lenders directly deduct the EMI from your bank account.Post-dated cheques Submit cheques for each EMI upfront.Online payments Through net banking or the lender’s mobile app.
Why should I use an EMI calculator?
An EMI calculator helps you:
Plan better: Understand the monthly repayment amount before taking the loan.
Compare options: Experiment with different loan amounts, tenures, and interest rates to find the most affordable option.
Save time: Quickly compute EMIs without manual calculations.