Floating rate of interest and tenure of payment of EMI?

I purchased a flat availaing a floating home loan of 20 lacs from Canfin homes for a period of 20 years at a prevailing rate of 11.75%. During the 2 year period, until now, the rate has decreased to 10.25%. How will either the EMI or tenure of the home loan get affected or how does the change in rates impact my loan repayment. Thanks for the help
Will the loan tenure reduce if the rate changes?

2 Replies to “Floating rate of interest and tenure of payment of EMI?”

  1. First, check yourself if you have received any communication from your lender about reduced rate of interest applicable to you. If you haven’t received any such communication, you need to approach them for clarification.

  2. Whenever the rate of interest changes, the banker will make calculations on the apportionment of your EMI for the Principal component and the Interest component. In your case, if the rate of interest has decreased, then the banker will be apportioning more money to the Principal component than the Interest component. To know the exact numbers and more details, it is best to contact your banker.

    as for your other question, whether the loan tenure will reduce if the rate of interest is decreased, the answer is yes, but the chances are very unlikely as the rate of interest will be changing every now and then..hence, there will not be a fixed tenure….the tenure might increase as the rate increases and decrease as the rate decreases…but if i have to answer to the point, yes the tenure will reduce.

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