When you take a loan from a bank or NFBC, you start repaying the loan in terms of EMIs each month. When you start paying your EMIs, some part of your EMI will be the interest and remain will be the principal amount. By doing this you are reducing your repayment amount each month and on reduced principal, you will have to pay less interest on your next installment. In the same way, your loan amount will get reduced by each passing month and your interest would also decrease year by year. Eventually, your EMIs will be done and internally it will pay off all the interest and outstanding principal amount.
Even today, many people don’t have the knowledge of EMI disbursements. They know that they have to pay an Equated Monthly Installments but they don’t know that what part of their EMI goes to repay the interest and principal loan. The longer the tenor will be, the more interest they will have to pay. The total interest will be higher than their principal amount. In the initial years of their loan repayment, most of the EMIs goes to interest part, not to the principal amount.
So, if you are thinking of taking a loan for a longer duration then you should keep in mind that you will be required to pay higher interest than the main amount. There is a better option for you! While you are paying your EMIs each month, start paying little chunks of your money as the extra amount. This will prevent you from paying large sums during the end periods of your tenor. Every small chunk will get added to your principal amount and later will be decreased from the loan.
If you are going to opt for short term loans, then you will have to pay a bigger chunk to cover the principal amount.
NBFCs and other lenders provide free calculators to the borrowers to calculate the exact amount that they have to pay during the complete tenor. There are many Home Loan amortization calculators available online, where you can get the general idea of payments and disbursements.
The schemes that banks had launched years ago was to take a Home Loan of low-interest rates and the interest rate was fixed for initial years. But after paying the low-interest rate for 1 or 2 years, the banks charged borrowers the floating interest rate which was their prime interest. This way the borrowers got stuck and had to pay an increased interest rate.
Home Loan interest calculator can help you in analyzing how much amount you need to repay once you borrow the loan. The lender will need your basic details like your monthly income, age, tenor and other loans that you have carried on etc. On the basis of these points, they will let you know whether you are eligible to take the Home Loan or not. After the eligibility criteria, you can easily calculate the interest rate on the borrowed money with the help of Home Loan interest calculator.
There are many lenders who provide the online facility of Home Loan amortization schedule calculators. Where you can calculate the amortization schedule and can determine the loan repayment schedule. The amortization schedule will display the payment details including your interest rate, principal amount, and EMIs. Here you can check monthly as well as yearly Home Loan interest rates.