How Does Banks Calculate Interest Rates on Housing Loan

A home loan is availed to buy a residential property. The bank takes the property you buy as collateral. It is released only after the complete payment, which includes the home loan interest and principal amount. The maximum repayment tenure for a home loan can be up to 35 years.


How is EMI calculated?


In today’s time, you can easily calculate the home loan EMI through the home loan EMI calculators. All you need to do is fill the principal loan amount, tenure of the loan, and the rate of interest. The calculator will then give you the monthly EMI along with a detailed amortization of the table which contains the principal opening and closing balance, principal and interest component in each EMI.


What is home loan interest rates?


There are two types of interest rates that a bank fixes for the loans it advances.
a) Fixed-rate: if you choose the fixed-rate, then your EMI would be the same throughout the loan period. This makes the budgeting task easier.


b) Floating Rate: In the case of floating rate, the rate of interest is determined based on the market interest rate. You should choose the floating interest rate if you expect that interest rate will go down soon.

 For Further Details:- How Does Bank Calculate Interest Rates On Home Loan

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