Home Loans

Key home loan terms include Principal, the loan amount borrowed; EMI, the fixed monthly payment of principal and interest; Interest Rate, the cost of borrowing, which can be Fixed or Floating; Tenure, the loan repayment period; Down Payment, your personal contribution to the home's cost; Amortization Schedule, a table breaking down each EMI payment; and Foreclosure/Prepayment, ways to pay off the loan early.  Here is a breakdown of common home loan terms:Core Loan Components

• Principal: The total amount of money you borrow from the bank to purchase a home. 
• Interest Rate: The percentage charged by the lender on the principal amount. 
  • Fixed Interest Rate: A constant interest rate and EMI throughout the loan tenure. 
  • Floating Interest Rate: An interest rate that fluctuates with market conditions, causing your EMI to vary. 
• Tenure: The total number of years or months over which you will repay the loan. A longer tenure results in lower EMIs but higher total interest costs. 
• Down Payment: The initial lump sum amount you pay from your own funds, typically a percentage of the property's total cost, reducing the amount you need to borrow. 

Repayment Terms

• EMI (Equated Monthly Installment): A fixed monthly payment that includes both a portion of the principal and the interest. 
• Amortization Schedule: A detailed table showing how much of each EMI goes towards the principal and interest, and how the loan balance decreases over time. 
• Foreclosure: Paying the entire remaining loan amount in one go, before the scheduled end of the tenure. 
• Prepayment: Making extra payments towards the principal amount over and above your regular EMIs, which can help reduce the loan tenure and total interest. 

Fees and Other Terms

• Processing Fees: A one-time charge by the lender to cover the administrative costs of processing your loan application. 
• Pre-EMI: A payment required on under-construction properties where you pay only the interest on the amount disbursed so far, before your regular EMIs begin. 
• Loan to Value (LTV) Ratio: The maximum percentage of a property's value that a bank is allowed to fund.