Deutsche Bank is a global bank and operates in almost 70 countries worldwide. A leading global provider of financial solutions, Deutsche Bank ventured into the Indian market in 1980. It has branches in 16 Indian cities and deals in a wide range of banking products and services catering to corporate and retail clients including fiduciaries and institutions. Its business divisions include Corporate Banking, Investment Banking and Private Banking. The bank employees more than 78,000 employees worldwide and is reckoned for its ethical values.
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One of the leading departments in the private banking unit of the Deutsche Bank is the home loan segment. Besides offering unique features, the home loans offered by the bank are affordable. Whether it?s about purchasing a new house or furbishing the existing property, Deutsche Bank offers a host of options that are specific to needs. The bank offers home loans at both fixed and floating rate of interests. The minimum interest rate offered by Deutsche Bank is 6.65% p.a.
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|Product Name||Interest Rate||Tenure||Processing charges||Ideal For|
|Deutsche Bank Housing Loan||Fixed and Floating Rate staring from 6.65% p.a.||5 years to 20 years||1% of the loan amount||Self-employed and salaried employees|
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EMI is the integral part of a home loan. It stands for Equated Monthly Installments and is defined as the monthly payment that is paid to the lending institution in order to repay the home loan. EMI amount comprises of two components - principal and interest. While the principal part of the EMI is adjusted against the principal outstanding, the interest part sets off the interest part of home loan. Although EMI is a fixed amount, the break-up ratio between the principal and interest changes with time. A major portion of the EMI installment is adjusted against the interest part in the initial years of the loan.
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EMI table is an important document in the home loan scheme. It shows the amount of outflow the customer will incur on a monthly basis over the entire loan period. EMI amounts differ for different loan amount and different tenure.
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Listed below is the Deutsche Bank home loan EMI schedule. The table shows EMI payouts calculated for different home loan principal amounts for different loan tenures at 6.65% p.a. interest rate.
|Loan Amount||Loan Tenure|
|10 years||15 years||20 years|
|Rs. 25,00,000||Rs. 28,578||Rs. 21,984||Rs. 18,861|
|Rs. 1,00,00,000||Rs. 1,14,313||Rs. 87,937||Rs. 75,443|
|Rs. 10,00,00,000||Rs. 11,43,127||Rs. 8,79,375||Rs. 7,54,430|
|Rs. 15,00,00,000||Rs. 17,14,690||Rs. 13,19,062||Rs. 11,31,645|
The above table enlists the EMI value against different home loan amounts availed for different loan tenures at 10 years, 15 years and 20 years. As the tenure increases, the EMI amount reduces for the same amount of home loan.
Thus, in case the applicant applies for a home loan of Rs. 15 crore (the maximum home loan principal allowed by Deutsche bank), the EMI amount payable every month will be Rs. 11,31,645 for 20 years. The same loan with a 10 year tenure will attract an EMI of Rs. 17,14,690.
As mentioned above, EMI constitutes of two components - principal and interest. Even though the EMI amount is fixed for the entire tenure, the ratio between the interest and principal repayment varies with each EMI. With every EMI paid, the portion of the principal component keeps on increasing while the interest component keeps reducing. In fact, the Principal to Interest Break-Up ratio is equally important when choosing the right home loan.
The table shows the break-up proportion of the EMI amount. The table is prepared for a home loan amount of 1 lakh at the rate of interest of 6.65% p.a.
|10 years||15 years||20 years|
|EMI per lakh||Rs. 1,313||Rs. 1,065||Rs. 955|
|Total amount repayable to bank (P+I)||Rs. 1,57,586||Rs. 1,91,780||Rs. 2,29,225|
|Total interest paid over the loan tenure||Rs. 57,586||Rs. 91,780||Rs. 1,29,225|
|Full-Term Principal to Interest Break-Up||63.5 : 36.5||52.1 : 47.9||43.6 : 56.4|
The table above depicts the division of the EMI per lakh for different durations of the home loan. As the duration of the home loan increases, the EMI reduces. But the proportion of the interest portion of the EMI increases, making the home loan more expensive over a longer period of time. For example, in case you take a home loan of 1 lakh for 20 year tenure, you pay the lowest EMI of 955. But you end up paying an interest of 1,29,225 on 1 lakh principal amount.
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EMI Calculator helps calculate the amount of the EMI installment. It is based on three variables ? Principal, rate of interest and tenure.
The mathematical formula used to calculate a home loan EMI is:
P = Principal loan amount
R = Rate of interest
N = Loan tenure in months
For Deutsche Bank the values for each are:
P = Minimum of 2.5 lakhs to a maximum of 15 crore.
R = 6.65% p.a.
N = can be a maximum of 240 months i.e. 20 years.
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The home loan EMI is dependent upon various factors. These are:
Principal Loan amount - It is the total amount of home loan that the borrower applies for. Higher the principal amount, higher will be the EMI. Deutsche Bank allows a home loan up to Rs. 15 crore.
Rate of Interest- Rate of interest is the interest charged by the bank on issuing a home loan. While the rate of interest is the income for the bank, it is an expense for the borrower. Higher rate of interest will lead to a higher EMI. The lowest interest rate charged by Deutsche Bank on its home loan is 6.65% p.a.
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Purpose of home loan: The type of home loan opted for affects the rate of interest, tenure and principal amount. A change in any three variables directly impacts the value of the EMI.
Applicant's occupation: The bank may charge different rate of interest from applicants with different job profiles. For example, a salaried employee with a government job is likely to get a loan at a lower rate of interest than self-employed individuals.
Loan tenure: The time period over which the loan is repaid is the loan tenure. The longer the loan tenure, lower will be the EMI. Deutsche Bank sanctions home loan for a maximum period of 20 years.
Existing bank customers: Existing customers of Deutsche Bank enjoy a lower rate of interest on home loans.
Credit standing: Applicants who have a clean banking record and a healthy credit score are more likely to negotiate a reduced interest rate with Deutsche Bank.
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EMI is a fixed amount of money that the borrower will pay every month for the entire loan term. Therefore, it is important that the EMI amount is calculated carefully. The EMI should not be too less as lesser values of EMI tend to go on for longer terms, making home loan expensive. On the other hand, a high value EMI to be paid over a reduced duration will call for unwanted financial stress. In such cases, the loan duration should be increased. Listed below are a few tips that help ascertain the right amount of EMI.
Check the principal amount: The principal amount of the home loan has a direct bearing on the EMI. As the entire principal value also attracts an interest charge, it is recommended to apply for the lowest principal amount. Thus, choose the property wisely, make provision for margin money and then critically assess your financial standing. Use EMI calculator to reach the ideal EMI amount.
Check your financial obligations: Home loan should not be applied in haste. It is a long term liability and directly impacts your financial standing. Therefore, it is important to clearly assess and evaluate your current financial obligations before applying for the home loan. Your monthly budget should comfortably account for the additional EMI outflow.
Check Eligibility: Deutsche Bank sanctions home loan only for the amount the applicant is eligible for. Deutsche Bank home loan eligibility of the applicant depends upon repayment capacity, income, age, qualifications, number of dependents, current financial standing with total assets and liabilities, applicant?s saving history, job stability and continuity of occupation. The applicant can use the Home Loan Eligibility checker to know the maximum amount of loan allowed. Deutsche Bank, however, allows applicants to team up with other co-applicants to enhance their loan eligibility limit.
Know your FIOR ratio: FIOR, or Fixed Income to Obligations Ratio is calculated to evaluate the repayment capacity of the applicant. It gives a clear insight into the current income and expenditure of the applicant. As a rule of thumb, all current EMIs paid of different loans availed from different lending institutions should not be more than 50% of the monthly income. Deutsche Bank considers a FIOR ratio up to 65%.
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Deutsche Bank home loan EMI does not change unless the customer requests for an upward or downward revision. The revision directly impacts the tenure of the loan. An upward revision will reduce the loan term while a reduced EMI amount will increase the loan term. Deutsche Bank charges an additional fee to entertain the EMI change request.
In cases where the customer enjoys a Deutsche Bank home loan at a floating rate of interest, any change in the rate of interest is adjusted against a change in the loan tenure without changing the monthly EMI installment. However, for cases where the term is already at the maximum, the changes are made in the EMI, keeping the loan duration same.
Home loans availed under tranched EMI scheme wherein principal amount is disbursed in parts, the EMI increases with every additional disbursement of principal amount.
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Deutsche Bank allows its customers to prepay home loans. While home loans at fixed rate attract a prepayment charge of 2.5% of the amount prepaid, home loans at floating rate of interest do not attract any prepayment penalty.
Every prepaid installment is adjusted against the outstanding principal amount of the home loan. The interest on the outstanding balance is recalculated at every prepayment. Subsequently, the borrower can either pay the balance amount through the same EMI over reduced home loan tenure or pay a lower amount of EMI over the same loan tenure. A new EMI schedule is prepared in the latter case.
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Deutsche Bank allows its customers to prepay home loan as and when possible. There is no restriction on the number of lump sum payments made. Home loans with fixed interest rate attract a prepayment fee of 2.5% of the prepayment amount, while there is no prepayment penalty on home loans with floating interest rate.
Deutsche Bank offers home loan for a maximum tenure of 20 years or for the number of years remaining until the applicant turns 65.
Deutsche Bank charges 1% of the principal amount as processing fee for approving a home loan.
Deutsche Bank allows its customers to make upward or downward changes in the EMI installment. While all changes in rate of interest are adjusted against loan term, for cases where the customer requests for a recalculation of EMI, a charge of 0.5% of the outstanding principal amount is levied.
Deutsche Bank calculates home loan interest on daily reducing balance. Thus, every time an EMI is paid or a prepayment made, the interest is only calculated on the outstanding portion of the home loan.