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19 November 2010

What is EMI?

EMI is a term often heard by us in regard with home loans. As the percentage of people going in for home loans is increasing so also is the availability of home loans becoming very simple and easy. EMI stands for "Equated Monthly Installment". EMI's are a term used not only for home loans but are used for any type of  loans example car loans, mortgage loans, business loans, second home loans etc.

The loan amount is decided according to the individual's financial capacity for repayment and the loan tenure, the period for which the loan has to be repaid. The amount of EMI is decided upon purchase of home and applying for a home loan. The total amount depends upon the amount of the property and the rates per square foot going on in that particular area. Taking of home loans is a long term decision and calculating per month the installment helps the individual to be prepared for the loan repayment schedule.
The term 'easy' is used as this amount is calculated according to the individuals capacity in repaying the loan. There are options where the borrower can go in for selected schemes according to their individual repayment capacity of the loan amount.
EMI"s vary from institutions either private loan lenders or government financial institutions and banks as this depends upon the property rates in that area and the interest rates applied by the lender. Hence it is not a universal amount for any house and one has to calculate the EMI"s before going in for a home loan.
When an individual considers buying a home and for this decides to go in for a home loan either from private lenders or government banks he has to pay a certain amount every month as part of repayment of the loan.

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