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Taking Home Loan? Here's when you should consider pre-EMI Option

By applying for a home loan at Finserv MARKETS, you can purchase the house of your dreams with ease

Thursday November 26, 2020 10:35 AM, ummid.com with inputs from IANS

Home Loan Tips

Everyone dreams of owning a home with the best facilities and amenities. The rise in the real-estate prices has however made it difficult to purchase a home with just your personal savings. This is where a home loan comes in and helps in financing your house purchase or to buy a land. Secured loans such as a home loan are also better for building a credit score than a personal loan which is an unsecured loan. Many financial institutions offer an additional overdraft facility and top-up options on home loans. Some do offer a current account facility wherein you can park your surplus funds and save on home loan interest rates. These facilities make a home loan an ideal option for many consumers, especially for self-employed applicants.

Pre-EMI Option

Equated Monthly Instalment or EMI is a repayment option on a home loan in which both interest and principal amounts have to be paid to the lender. Many banks and financial institutions offer EMI home loans as another method for the repayment of the home loan, which is known as the pre-EMI plan. The home loan Pre-EMI option is offered for properties that are under-construction wherein the loan amount is usually disbursed in a staggered manner with the progress of the construction.

● Pro’s

Borrowers opting for pre-EMI interest option are required to service the interest component until the disbursal of loan. With a Pre-EMI option, borrowers are not repaying anything towards the principal home loan amount. Pre-EMI is just a reduced payment that gives the borrower time to build finances before the EMIs get started. For example, the borrowers who are living in a rented house while the apartment is getting constructed, can opt for a pre-EMI option. Doing this will reduce the burden of paying hefty EMIs along with paying the rent.

● Con’s

The downside of availing the pre-EMI option is the higher interest rate charged on the loan than the regular EMI option for home loan. For such borrowers, the pre-EMI offers another variant for loan repayment option, wherein the borrowers have to serve both the interest and principal components of the disbursed funds. Under this option, the EMI keeps increasing when the loan is disbursed till the final portion of the loan disbursal. Repayment of the principal component of the loan disbursed leads to low interest rate on the loan amount.
Home Loan Eligibility Criteria

The following are the basic home loan eligibility criteria:

● Must be an Indian citizen to be eligible for the loan
● You should be a salaried individual with at least three years of experience
● The applicant must be in the age group of 23 to 62
● Home loan amount you can apply for a minimum of 10 Lakh and maximum amount of up to Rs. 3.5 Crore

Documents Required

● Identity Proof such as Aadhar, PAN Card, Voter’s ID Card, etc.
● Address Proof such as Aadhar Card/Passport/Driving License, etc.
● Form 16 or your latest salary slip.
● The applicant’s bank account statement of previous 3 months

Home Loan Calculator

Formula to calculate Home Loan EMIs is [P x R x (1+R)^N]/[(1+R)^N-1]

● ‘P’ represents the loan amount or principal amount
● ‘N’ is the number of monthly instalments
● ‘R’ is the interest rate per month.

If the rate of interest on home loan is is 11% per annum, then the value of ‘R’ will be 11/(12 x 100)

Factors Affecting Home Loan EMI

Calculate home loan EMI with the help of a home loan calculator. All you have to do is enter the values for ‘Loan amount’, ‘Tenor’ and ‘Rate of Interest’ and you will get accurate results for your loan:

Loan Amount: The loan amount you require and wish to avail with the loan
Loan Tenure (In Years): You need to mention the desired loan term for which you wish to avail the home loan. A longer loan tenure helps in reducing the EMI and enhance one’s loan eligibility
Interest Rate (% P.A.): Input interest rate.

With home loans fulfilling the dream of getting a new home becomes quite easier. It has also become equally important to identify your requirements and apply for the right type of home loan. By applying for a home loan at Finserv MARKETS, you can purchase the house of your dreams with ease. The online home loan application process is quite simple and requires minimal paperwork and you can apply for up to Rs 3.5 Crore of the loan amount. Home loans at Finserv MARKETS provide complete transparency with no hidden charges and no dubious loan policies.

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