How to read your home loan statement
When applying for a home loan in India, one of the essential documents you will receive is the home loan statement. This statement provides a detailed overview of your loan. Reading and understanding your home loan statement is crucial.
Components of a typical home loan statement
1. Personal details: The home loan statement begins with your personal information, such as your name, address, contact details, and loan account number. Ensure that all the details are accurate and match the information provided during the application process.
2. Interest rate: The statement will display the borrowed loan amount and the applicable interest rate. Take note of any changes in the interest rate over time, especially if you have a floating interest rate.
3. Tenure and EMI schedule: It will also display the tenure, i.e., the duration within which you are required to repay the loan and a detailed EMI schedule including the date, amount, and breakup of each equated monthly instalments (EMI).
4. Principal and interest components: Each EMI comprises two components: principal repayment and interest payment. As you progress through the tenure, the proportion of principal and interest in the EMI changes. Initially, a higher percentage goes towards interest, while over time, more amount is allocated to the principal repayment.
5. Outstanding balance: The statement will display the remaining outstanding balance at the beginning of the loan tenure and how it changes after each EMI payment. Monitoring the outstanding balance will help you understand the progress of your loan repayment.
6. Fees and charges: Check for any additional charges, such as processing fees, late payment charges, or prepayment penalties. Ensure that these charges are in line with what was agreed upon during the loan application process.
7. Repayment: It will provide a detailed repayment history, indicating the EMIs paid and any dues or defaults, if applicable. Keeping track of your repayment history will help you stay on top of your loan obligations.
8. Prepayments and part-payments: If you have made any prepayments or part-payments towards your home loan, the statement will reflect these transactions.
Reading and understanding your home loan statement empowers you to track your loan progress, plan your finances, and make informed decisions. If you ever have any doubts or concerns about the information in the statement, do not hesitate to reach out to your lender for clarification.
