Own contribution or margine money
This is the minimum ammount of money that you need to put in as your own contribution towards the purchase of the house. Most banks insist that this amount is paid upfront before they release any disbursement.
Personal guarantor
Some banks insist that you provide for one or two personal garantors.Thegarantor is required to meet the norms specified by the bank, which are similar to the norms of the applicant.
Pre-approval
In a home loan you have a facility to apply for a home loan before you descide on the property. However, disbursement takes place only after the property is selected and is technicaly and legaly cleared.Such cases are called pre-approvals as the loan is approved before the coustomer selectes a property,This helps you to descide on a budget to buy the property of your choice.
Prepayment
At any point in time, you can pay back the loan amount either in part or in full.This is called a prepayment.Normaly, banks have a cap on the number of times that a person can repay his loan amount durring a financial year and on the minimum amount that can be prepaid.
Principal
This is the capital sum in a finance transection as opposed to interest.
Calculating Equated Monthly Installment
(Emi)
In housing finance, equated monthly installment (EMI) reffers to the monthly payment towards intrest and principal made by our borrower to our lender.EMI is calculated using a formula that considers loan amount,intrest rate and loan period as variables.
The formula for calculating EMI
EMI = (L x I) x (1 + I)^N
[(1+I)^N] - 1
Where
L = Loan amount
I = Intrest rate (rate per annum divided by 12)
^ = To the power of
N = Loan period in months
Assuming a loan of Rs. 1 lakh at 11 percent per annum, repayble in 15 years, the EMI calculation using the formula will be:
EMI = (1,00,000 x 0.00916) x (1+ 0.00916)^180
[(1+0.00916)^180]-1
= 916 x 5.161846
4.161846
EMI = Rs. 1,136
