[IDFC Bank] Home loan calculator and actual EMI mismatching

[CC-Muncher]

I have a IDFC home loan with an 8.75% interest rate (monthly reducing rate) offered with an EMI of Rs 27,876 for a loan of 32 Lakh of which the balance amount is Rs. 28.64 Lakh and tenure 191 months left out of a total of 213 months. (I am having a healthy cibil > 800 for quite long)

If I use the IDFC home loan calculator or any other I see EMI to be less than what is charged. On checking with the Nodal officer (Grievance Redressal Team) the reply I got was -
"The operations team has calculated it and the system has generated this EMI."

They don't have any answer for what different calculations they are doing to arrive at increased EMI. On telling them If I complained to the RBI Ombudsman about not being able to provide info about the difference in EMI calculation, the executive said he couldn't comment on that and asked me to do whatever felt right.

Is anyone else in the same boat? how to go about it and get the same EMI as shown in all the calculators?

 

[appworld]

Following this thread 🍿

 

[aayusharyan]

I have a IDFC home loan with an 8.75% interest rate (monthly reducing rate) offered with an EMI of Rs 27,876 for a loan of 32 Lakh of which the balance amount is Rs. 27.64 Lakh and tenure 191 months left out of a total of 213 months. (I am having a healthy cibil > 800 for quite long)

If I use the IDFC home loan calculator or any other I see EMI to be less than what is charged. On checking with the Nodal officer the reply I got was -
"The operations team has calculated it and the system has generated this EMI."

They don't have any answer for what different calculations they are doing to arrive at increased EMI. On telling them If I complained to the RBI Ombudsman about not being able to provide info about the difference in EMI calculation, the executive said he couldn't comment on that and asked me to do whatever felt right.

Is anyone else in the same boat? how to go about it and get the same EMI as shown in all the calculators?

There can be a few things:
1. The rate of interest has changed - RBI did a lot of changes last year in Repo Rate because of which the EMI amount might have increased.
2. The loan amount was different - Did you take an Home Loan insurance which they usually try to sell as mandatory (even though it is not mandatory). That premium amount also they add to the loan principle only.
3. Maybe you missed an EMI - I really hope not, but check your history.

Now, better way to figure out what's going on.
1. Check the history and try to see when it started deflecting. Any event happened that time. Why is it deflecting. We need to know.
2. Try any other bank's EMI Calculator, maybe IDFC has a software error.

Check all these things and then we can haver better idea to what's going in.

 

[CC-Muncher]

There can be a few things:
1. The rate of interest has changed - RBI did a lot of changes last year in Repo Rate because of which the EMI amount might have increased.
2. The loan amount was different - Did you take an Home Loan insurance which they usually try to sell as mandatory (even though it is not mandatory). That premium amount also they add to the loan principle only.
3. Maybe you missed an EMI - I really hope not, but check your history.

Now, better way to figure out what's going on.
1. Check the history and try to see when it started deflecting. Any event happened that time. Why is it deflecting. We need to know.
2. Try any other bank's EMI Calculator, maybe IDFC has a software error.

Check all these things and then we can haver better idea to what's going in.

1. i am using the same rate as bank for calculation, so no difference
2. loan amount is samre... no insurance component
3. never missed any EMI. my slate is clean

2nd part:
1. Its deflecting from the start. Even now when I am asking to restructure the loan by reducing the tenure the new EMI proposed is coming higher than the one shown by various calculators.
2. all calculators show the same. Banks actual calculation has this deviation

 

[RAMESH BABU N]

More often than not, borrower/field officer/branch manager applies/forwards application for X amount for Y months.

After loan is disbursed neither the borrower nor the branch verifies WHAT HAS BEEN SANCTIONED - AMOUNT, TENURE, RATE OF INTEREST, MORTGAGE TERMS N OTHER CONDITIONS.

Have a detailed look into the SANCTION LETTER (and not your application) n then calculate the EMI accordingly. Tenure n ROI might have been different.

 

[aayusharyan]

1. i am using the same rate as bank for calculation, so no difference
2. loan amount is samre... no insurance component
3. never missed any EMI. my slate is clean

2nd part:
1. Its deflecting from the start. Even now when I am asking to restructure the loan by reducing the tenure the new EMI proposed is coming higher than the one shown by various calculators.
2. all calculators show the same. Banks actual calculation has this deviation

Then check the sanction letter. Your ROI might be different than what you think.

 

[CC-Muncher]

More often than not, borrower/field officer/branch manager applies/forwards application for X amount for Y months.

After loan is disbursed neither the borrower nor the branch verifies WHAT HAS BEEN SANCTIONED - AMOUNT, TENURE, RATE OF INTEREST, MORTGAGE TERMS N OTHER CONDITIONS.

Have a detailed look into the SANCTION LETTER (and not your application) n then calculate the EMI accordingly. Tenure n ROI might have been different.

tenure and ROI has changed overtime due to pre payment and interest rate change.
at current stage, the calculations should match up.

or at least with restructuring now, the EMI quotes are off by3-4k

 

[CC-Muncher]

Then check the sanction letter. Your ROI might be different than what you think.

it started with 6.5% and now reached 8.75 after RBI's hike.
The EMI has remained same and the tenure is not fitting in the calculations.

 

[aayusharyan]

tenure and ROI has changed overtime due to pre payment and interest rate change.
at current stage, the calculations should match up.

or at least with restructuring now, the EMI quotes are off by3-4k

So there have been changes in the loan agreement terms in the duration of the loan.
See, you need to trace it back to where it was in sync. And since you say it wasn't in sync from the very start. Check the numbers on the sanction document as well as the EMI calculation document (I forgot the formal name, but that document which lists all the EMI payment with interest component and principal component, the breakdown document).
Check that and compare with what you expect.

 

[aayusharyan]

it started with 6.5% and now reached 8.75 after RBI's hike.
The EMI has remained same and the tenure is not fitting in the calculations.

If the EMI is same, then banks increase the tenure to compensate for the extra interest. Actually RBI recently released a guideline that banks should ask before making such decision by themselves because in many cases it actually lead to negative amortization.

 

[CC-Muncher]

So there have been changes in the loan agreement terms in the duration of the loan.
See, you need to trace it back to where it was in sync. And since you say it wasn't in sync from the very start. Check the numbers on the sanction document as well as the EMI calculation document (I forgot the formal name, but that document which lists all the EMI payment with interest component and principal component, the breakdown document).
Check that and compare with what you expect.

sure i'll do that!

but with restructuring shouldn't it become normal?

 

[CC-Muncher]

If the EMI is same, then banks increase the tenure to compensate for the extra interest. Actually RBI recently released a guideline that banks should ask before making such decision by themselves because in many cases it actually lead to negative amortization.

True. But banks are yet to implement it 😥

 

[aayusharyan]

sure i'll do that!

but with restructuring shouldn't it become normal?

What do you refer to as normal?
This will never be in sync with the original EMI/tenure which were agreed upon because since then, the Rate of Interest has changed and assuming your loan was on a Floating Interest (Almost all the Home Loans are on that), your EMI and/or Tenure will change.

With restructuring, you are just asking the bank to recalculate the current pending Principal (as of now) and adjust tenure / emi amount according to your preferences.
Also note, many banks have charges for Restructuring the loan, so that either you pay separately or will be added to your principal outstanding.

 

[CC-Muncher]

What do you refer to as normal?
This will never be in sync with the original EMI/tenure which were agreed upon because since then, the Rate of Interest has changed and assuming your loan was on a Floating Interest (Almost all the Home Loans are on that), your EMI and/or Tenure will change.

With restructuring, you are just asking the bank to recalculate the current pending Principal (as of now) and adjust tenure / emi amount according to your preferences.
Also note, many banks have charges for Restructuring the loan, so that either you pay separately or will be added to your principal outstanding.

with normal I meant=> with new rate and same EMI, tenure should matchup with the calculators right? which is not matching up

Sharing the calculations which I shared with Nodal officer:

 

[aayusharyan]

with normal I meant=> with new rate and same EMI, tenure should matchup with the calculators right? which is not matching up

Sharing the calculations which I shared with Nodal officer:

Is your case of negative amortization? Calculate if the current outstanding principal + ROI with 144 months tenure (or whatever you think is pending). What EMI value value you get. If your current EMI is less than that. Maybe then your case is of negative amortization.

 

[aayusharyan]

with normal I meant=> with new rate and same EMI, tenure should matchup with the calculators right? which is not matching up

Sharing the calculations which I shared with Nodal officer:

Sorry for last message. I checked carefully your shared SS.
Your current EMI is more than 32,274. What is the tenure remaining according to you? 144 months or something else?
Initial loan tenure - paid EMI tenure = remaining loan tenure. lol 🙈

 

[CC-Muncher]

Is your case of negative amortization? Calculate if the current outstanding principal + ROI with 144 months tenure (or whatever you think is pending). What EMI value value you get. If your current EMI is less than that. Maybe then your case is of negative amortization.

I did calculate that: (ignore 3rd point)

 

[aayusharyan]

I did calculate that:

How many months exactly are pending in your loan tenure?
We know, current Principle Outstanding, Current Rate of Interest, we just need to know Current Remaining tenure to calculate the EMI and check with what you are paying is correct or not.

 

[CC-Muncher]

How many months exactly are pending in your loan tenure?
We know, current Principle Outstanding, Current Rate of Interest, we just need to know Current Remaining tenure to calculate the EMI and check with what you are paying is correct or not.

191 months remaining now. Total wa 213months
remaining principal - Rs. 28,64,390
Current EMI - 27.876

 

[aayusharyan]

191 months remaining now. Total wa 213months
remaining principal - Rs. 28,64,390
Current EMI - 27.876

Right, 191 months remaining is 15 years. So, your actual emi should be 28.6K. Even by 500, your current EMI is less than actual emi. It will be case of negative amortization.

Ref: