Home Loan interest

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ahmed (Querist)
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23 October 2009 One of the client in my firm has taken a Home Loan in citi financials in the year 2005. the loan amount taken was 3000000/- and the EMI is 41250/- for a tenure of 144 months i.e., 12 years. our client approched the financier for pre-closure of the loan, the financier has increased the tenure to 194 months instead of 144 months resulting in 50 months excess payment of Rs 41250/- per EMI. Our client when enquired about this, he got the reply that the no.of EMI`s were increased due to rise in interest rates? now my question is " how financier can alter the interest rate and the no.of EMI`s when the instalment is fixed on MONTHLY EQUATED INSTALMENTS"

K V Subba Rao

K V Subba Rao (Expert)
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24 October 2009 Ingredients to work out EMI include Principal amount, Tenure (Period) and Rate of Interest.

When Rate of Interest is revised, either EMI amount has to be increased or Tenure has to be increased or it could be a combination of both

Whether the Financier could revise the Rate of Interest or not depends on nature of Interest-Fixed or Floating.

Websites of almost all Banks provides Calculators for EMI etc.

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