With Corporation Bank home loans, borrowers get the benefit of a floating rate of interest. Usually, when there is a change in the rate of interest, the EMI amount changes accordingly. But with Corporation Bank home loans, the EMI will remain the same but the repayment tenure is adjusted accordingly.
If there is a drop in the interest rate, the repayment tenure will also drop, and if there is an increase, the tenure will also increase accordingly.
This proves to be very beneficial for the borrower as they don’t have to bother about fluctuation EMI amounts. This lets them plan their finances accordingly and contribute to additional part payments towards the loan.
For example, a home loan of Rs.50 lakh, with an interest rate of 7.5% and a repayment tenure of 20 years will cost you a monthly EMI of Rs. 40,280. This is a pretty high EMI amount for a salaried individual. If the bank regularly changes this EMI amount based on the changes to interest rate, the borrower is faced with budgetary problems. This may lead to defaults in loan payments too.
To avoid this and to offer the benefit of consistency to borrowers, Corporation Bank adjusts the repayment tenure on the loan.
Additional Reading: Loan Repayment