EMIs have become an integral part of our lives. However, many people still do not understand the nitty-gritty of it. People take loans from banks for various reasons, especially when they want to buy a property from real estate developers in Pune. Some people buy a home for end-use, whereas some do it for investment. And some buy a commercial property to run their brick and mortar business. But no matter your purpose of purchasing a real estate property, it’s always better to understand EMI in detail. And we hope this article gives you insights regarding EMI and makes it easier for you to make a real estate investment.
When individuals borrow money from any particular financial institute, they can repay the amount in small parts. These small amounts are called Equated Monthly Installment, or EMI payments, which have to be paid every month as instalment with inclusive interest, and within the given period. Now let’s take a look at the factors that affect EMI.
The amount for EMI payments on a loan is not decided randomly. Three factors are taken into account:
Loan amount stands for the total sum of the amount borrowed by an individual from any financial institute.
The rate of interest imposed is based on how huge, or less the amount is, and it also depends on the lender.
This is the particular time-frame decided between the lender and borrower to repay the loan.
With the amount borrowed, people looking forward to buying a property, car, or any other commodity should know how EMI is calculated. It will give the borrower a clear idea of how much they have to pay every month.
Calculating an EMI does involve some mathematical formula, but doing it will give you the precise amount of EMI payments.
The formula to calculate EMI is:
EMI = P × r × (1 + r)n/((1 + r)n – 1)
P denotes the loan amount, r denotes interest rate, and n denotes tenure in the number of months. To give you an example, if the principal amount borrowed is Rs. 1 lac, the interest rate is at 10%, and the tenure is for 12 months, then the EMI payment every month would be Rs. 8792.
Another major factor that affects the payment of EMI is the type of interest rate levied on the loan. In fixed-rate loans, the EMI payments remain constant for the whole tenure. In floating rate loans, the EMI payments vary on the prevailing market rates.
Any pre-closure or partial payments made for the loan also affects the EMI payments. If a partial payment is made for the loan, then it is deducted from the principal amount, and this partial payment made reduces the total interest rate that is to be paid.
EMI is an excellent way for anybody to buy their dream home. Pharande Spaces, the leading developers in PCMC, Pune, has some of the premium residential projects in the prime locations of West Pune and PCMC. Pharande Spaces know what a dream home means to an individual. So they often provide the best offers and easy payment plans to make it smooth and hassle-free for a homebuyer.