What are Flexible and Fixed Home Loan EMIs?

Housing loans are taken out by individuals to purchase a plot of land or property. It is one of the best financing options to arrange a huge source of funds to purchase a property. Real estate is one of the most expensive investments, and it can be difficult to balance the cost of the property with income or savings. 

Therefore, individuals rely on getting a home loan from the best bank or non-banking financial company. However, when you take a housing loan, you will come across fixed and flexible housing loan EMIs. Let us understand in detail what a housing loan EMI is all about. 

What is a fixed EMI? 

In a fixed housing loan, you will get a fixed amount every month to pay. There will not be any reduction in the rate of interest or the monthly installment amount. Fixed housing loans are the most popular nowadays with banks and non-banking financial companies. In a fixed housing loan, the rate of interest and the monthly installment amount do not change with the reducing principal loan value every month. From start to finish, the monthly installment amount will be the same and the rate of interest will be the same throughout the tenure of the loan. This helps you manage your finances because you know the monthly installment amount that you need to pay. There will not be any reduction or increase in the amount that you need to pay.

What is a flexible housing loan EMI?

In a flexible housing loan, the monthly installment and the rate of interest keep changing with the reducing principal loan value. You will need to pay a different rate of interest and monthly installment amount based on the reduced loan amount. The rate of interest is decided on the outstanding loan principal value that is remaining after paying the monthly installment every month. This means you will have a different monthly installment to pay every month based on flexible housing loans. It becomes difficult and the calculation is complicated as you have to get a new amount every month based on the principal loan outstanding. 

Read Must: Cheap Home Loans Aren’t For All. Do You Make The Cut?

Wrapping up

When you get a home loan for salaried individuals, you need to meet the home loan eligibility criteria. It is important to have all the home loan documents required by the banks.