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Home Loan Terms in India

home loan terms

This article will help you to know more about the Home Loan terms and procedures in India.

Major Steps in the Bank Home Loan

The two major steps in home loan process are

  • Approval of the loan
  • Disbursement of the Home loan – This is when you will get the loan amount approved to you.

Fees for the Home Loan

You need to pay two types of fees

  • Processing fee
  • Administration fee

What is EMI ?

You have to pay back the loan in equated monthly installments also known as EMI in short. This EMI comprises of principal and interest. Your EMI commences from the month following the month in which you take full disbursement. Eg. If he home loan is fully disbursed to you in February then the EMI will start from next month, March. EMIs are usually paid by post dated cheques.

Pre-EMI interest

You need to pay a simple interest on the portion of the home loan before final disbursement is done, known as Pre-EMI.

This interest is known as pre-EMI interest. Pre-EMI payments should be done by the last day monthly.

Amortisation schedule

Amortisation schedule is a table showing the reduction of your loan amount by monthly installments. This table shows you the breakup of every EMI towards repayment of interest and your outstanding principal of home loan

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  1. This article is good enough to answer most of the stuffs. I would like to know few more things regarding home loans:
    1. Are there penalties levied if we pay more or less than the specified EMI?
    2. If we take the loan for 20 years and cannot pay it in 20 years, will the bank extend the loan re-payment duration? What procedures needs to be followed to extend the period?
    3. If the home gets damaged in some natural disasters, what are the owners supposed to do?

  2. This is also very nice article. But it needs an explanation in some points. Yesterday I came through a term called prepayment charges. Is it applicable for home loans too? So what will be the penalty charges if loan is due? Is there any time span in which the property will be auctioned?

  3. A home loan is the most popular loan among us, which helps us to attain our ultimate dream, a home. And this article helped to understand the concept of house loans. Even if I have seen many of my colleagues taken loans, I was completely unaware of pre-EMI interest charges. The calculations are perfectly explained as well.

  4. Home loans in our country is very popular due to varied reasons. The article tried to explain certain terms with clarity. At times these terms look weird because of ignorance. A detailed explanation of more such articles is required.


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