Home loan Interest rates & EMIs explained.
Home loan interest rates and EMIs (equated monthly instalments) are two important factors to consider when taking out a home loan.
The interest rate is the percentage of the loan amount that the lender charges for borrowing the money. It can be fixed or variable. In case of a fixed rate, the interest rate remains constant throughout the loan tenure, while in case of a variable rate, the interest rate can fluctuate based on the market conditions.
EMIs, on the other hand, refer to the fixed monthly payments that a borrower has to make to repay the loan. EMIs are calculated based on the loan amount, interest rate, and loan tenure. They are typically higher at the start of the loan and decrease over time as a portion of the payment goes towards paying off the principal amount borrowed.
The total interest paid on a loan over its entire tenure is influenced by the interest rate and EMI structure. Higher the interest rate and/or longer the loan tenure , more the interest one pays. Hence, it's important to select the right interest rate and EMI option that suits your financial goals and repayment capacity.
It's always good practice to use online EMI calculators to understand how much the EMI and interest will be for different loan amount, tenure and interest rate. Also it helps in comparing different loans, and find the one that suits your budget.