What is the impact of loan restructuring on my EMI amount?

Loan restructuring can have a significant impact on your Equated Monthly Installment (EMI) amount. Loan restructuring typically involves modifying the terms of an existing loan to make it more manageable for the borrower. Here's how it can affect your EMI:

1. Extension of Tenure: One common form of loan restructuring involves extending the loan tenure. When you opt for this, your loan's repayment period is lengthened, which reduces the EMI amount. The longer the tenure, the lower your EMI will be.

2. Change in Interest Rate: In some cases, loan restructuring may involve changing the interest rate. For instance, if you have a variable interest rate loan, it might be converted to a fixed interest rate, or vice versa. This can impact your EMI because fixed and variable interest rates have different EMI structures.

3. Principal Amount Adjustment: Loan restructuring might also include adjusting the principal amount. In some cases, lenders may allow you to temporarily pay only the interest portion of the EMI, with the principal amount deferred. This can reduce the EMI for a specified period.

4. Partial Waiver or Reduction: In situations of financial distress, lenders may offer to waive a portion of the outstanding principal or reduce the interest rate temporarily. This can lead to a lower EMI during the restructuring period.

It's important to note that loan restructuring is typically done in response to specific financial challenges or hardships, such as job loss or a significant drop in income. The goal is to provide temporary relief to borrowers facing difficulties. However, it's essential to carefully review the terms and conditions of the loan restructuring agreement and fully understand how it will impact your EMI and overall loan repayment.

Keep in mind that loan restructuring is subject to lender policies and regulatory guidelines, and not all borrowers may be eligible for it. It's advisable to consult with your lender to discuss your specific circumstances and explore available options if you're facing financial difficulties that affect your ability to make regular EMI payments.