This is the loan amount you borrow from the bank or lender. For example, if you need Rs 50 lakh to buy a house, that Rs 50 lakh is your principal.
Interest Rate
The fee charged by the lender for letting you borrow money. Fixed Rate: This doesn’t change during the loan tenure.Floating Rate: Changes as per market conditions, which can increase or decrease your EMIs.
EMI
The fee charged by the lender for letting you borrow money. Fixed Rate: This doesn’t change during the loan tenure.Floating Rate: Changes as per market conditions, which can increase or decrease your EMIs.
Loan Tenure
The period over which you repay the loan. Typically, home loan tenures in India range from 5 to 30 years. A longer tenure means smaller EMIs but more interest paid overall.
Loan-to-Value Ratio
The percentage of the property’s value the bank is willing to lend. For example, if a property is worth Rs 50 lakh and the bank offers 80% LTV, you can get a loan of Rs 40 lakh. The rest, Rs 10 lakh, is your down payment.
Processing Fee
A one-time charge by the bank for processing your loan application. It’s usually a small percentage of the loan amount, ranging from 0.25% to 1%.
Prepayment and Foreclosure
Prepayment: Paying off a part of your loan before the tenure ends. It reduces your principal and overall interest.Foreclosure: Paying off the entire loan amount before the end of the loan tenure. Some banks charge a penalty for prepayment or foreclosure.
Credit Score
Your credit score reflects your creditworthiness. A score above 750 is ideal for getting attractive interest rates for housing loans.