Factors affecting EMI and its calculation:
When the interest rate changes during home loan tenure: Depending on the type of interest rate chosen by the customer will the interest rate be affected. If a customer has opted for a floating rate of interest, their home loan EMIs may change according to the changes in the market lending rates. If a customer thinks floating interest rate is the risky option, they can opt for a fixed interest rate.
When home loan principal amount has been pre-paid: Almost all financial institutions allow the customer to make extra payment or pre-payment towards their home loan. This will lower their outstanding principal amount and the interest burden. The financial institution charges a certain percentage (1% - 3%) on the outstanding principal amount as pre-payment penalty.
When tenure of loan has been changed: Whenever a customer changes the home loan tenure, their EMIs also tend to change. The longer the home loan tenure, the lower will be the EMI and shorter the home loan period, the higher will be the EMI. But a customer should understand that if they opt for a long home loan tenure, then it would mean more interest payment towards the home loan that will increase their cost of credit.