NEWS & ADVICE : HOME LOANS
Know your home loan better
By Joseph Samson
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Any individual who is planning to take a home loan should be familiar with the terminology that home loan financer as well as the loan agreement mentions every now and then. An understanding of such terms makes a home loan deal clear in the mind of the borrower. Here are some terms that one must know while he goes to shop for a home loan.

Margin Money

When you are searching for a home loan, you always come across the term margin money right at the time of sanction of the loan amount. Any financer or lender does not lend the entire amount of the housing property. It will only extend around 80% to 90% of the cost of your home and remaining amount has to be brought by the borrower. This amount which the borrower brings is known as the margin money. Commonly it is known as the down payment. It is basically the difference between the total cost of a project and the sanctioned loan amount.

Equated Monthly Installments

When we take housing loan or to that matter any loan, we also have to repay it in a certain period of time. Equated Monthly Installments or EMI is the amount of money that is paid every month towards the repayment of a loan. It is used to pay-off both interest and principal each month, so that over a specified number of years, the loan is paid off in full. The EMI is calculated on the basis of interest rate charged on a loan, principal which is the actual amount of the loan and the loan tenure which is the total number of years considered to repay the loan.

EMI benefits the borrower by making him aware about the money they will need to pay toward their loan each month, making the personal budgeting process easier.


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