What is an equated monthly instalment?

   2020-08-14       31        Finance
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An EMI is an outstanding loan spread across a stipulated tenure. This part becomes the monthly payable by the borrower throughout the stipulated time frame.


An EMI is an equated monthly instalment. An EMI is an outstanding loan spread across a stipulated tenure. This part becomes the monthly payable by the borrower throughout the stipulated time frame.

The EMI is dependent upon various factors such as:

  • Principal amount borrowed
  • Rate of interest (fixed or floating)
  • Loan tenure
  • Monthly or annual resting period

The EMI remains fixed in the case of fixed interest home loan and is subject to payment default or intermittent payments. The EMI actually constitutes part of the principle amount borrowed and the interest on the borrowed sum. Starting from the first EMI where the interest component is higher and the principle component is lower gets gradually shifted to higher principle amount and lower interest till the last EMI.

If in case the borrower makes any intermittent payments before the loan tenure is lower subsequent EMIs get reduced or the loan tenure gets reduced or it might be a mix of both. And the reverse process happens when a borrower skips an EMI either due to dishonour of checks or insufficient funds in case of auto deduction. The balance EMI might increase or the number of EMIs can go beyond the loan tenure or might be a mix of both. Also skipping of an EMI means inviting financial penalty if any.

In the case of floating home loans if the rate of interest reduces during the tenure of the loan the subsequent EMIs might get reduced or the number of EMIs to be paid will be reduced or a mix of both. And the reverse happens when there is an increase in the rate of interest leading towards increase in the number of EMISs or increase in the EMI or a mix of both.

Whether fixed or floating the first EMI outgo, the interest rate component is the highest and the principle rate is lower gradually leading to the last EMI where the in"
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Repco Home Finance Ltd

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Repco Home Finance Ltd

Repco Home Finance Ltd (RHFL) is a professionally managed housing finance company head quartered in Chennai, Tamil Nadu. We were incorporated in April 2000. We are registered as a housing finance co..


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