Purchasing your dream house becomes easier by means of a home loan. You can take the help of an EMI calculator to find out the cost of borrowing.
EMI (Equated Monthly Instalment) is a sum paid during a month to a financial institution to repay a home loan. It comprises the principal component and the interest payable on a loan. Do you want to avail a Rs. 1 crore home loan? Keep reading to know about the cost!
A home loan of Rs. 1 crore is a lump sum amount borrowed to buy a house. The home being purchased is kept as collateral. This is a secured loan having certain payment terms and fixed or floating interest rates. Such a loan can effectively finance your property expenses and be repaid via EMIs. Let’s find out how EMIs work?
To compute EMI, the summation of interest and the principal amount is divided by the number of months during which you need to repay the loan. For the initial months, the interest portion will be higher. However, it will decrease with each instalment. It is the interest rate that determines the proportion of principal payment.
EMI payments of an individual will not change in the case of fixed interest home loans, but the proportion of interest and principal will vary over time. The interest amount keeps falling, and the principal sum keeps rising every successive month. The formula to compute EMI is as follows:
EMI = (P. r. (1 + r)ˆn) ÷ ((1 + r)ˆn – 1)
Here P = Principal amount of loan, r = Monthly interest rate (r = Annual interest rate ÷ 12 ÷100) and n = Loan tenure in months.
A home loan EMI calculator is an efficient and time-saving tool to calculate the amount that you need to pay each month towards your housing loan.
Also read: Rs. 40 Lakh Home Loan
Here are some advantages of a home loan EMI calculator:
Selecting the correct tenure
After you have decided to avail of a loan of Rs. 1 crore, you need to figure out the correct tenure for repayment. In that regard, the EMI calculator proves to be extremely beneficial. An individual can choose a short period with high instalments or a long period with comfortable instalments.
Effective loan management
A person may want to make prepayments in case of having excess funds during successive payments. Before doing so, he/she can use an EMI calculator to find out how prepayment will work on the loan and the tenure.
An EMI calculator can help compare home loan offers of various financial institutions. It will showcase the loan cost and the monthly instalment for each entity. As a result, customers can choose the most suitable option for them.
Manually calculating EMI can be laborious, and the result might be inaccurate. An online calculator gives you exact results instantly once you enter the required values.
Some vital factors that impact interest rates and change the EMI amount are as follows:
Navi offers home loans of up to Rs. 1.5 crore at competitive interest rates. It provides financial assistance for the purchase of both apartments and independent properties; the repayment tenure can be up to 25 years. Interest rates start at 6.46%, and the application procedure involves no paperwork.
You can download the Navi app and apply for a home loan at your convenience.
Do you want to compute EMI for a house loan of Rs. 1 crore?
You can easily do so using Navi’s home loan EMI Calculator. This calculator uses the above-mentioned formula to compute the total loan cost and the instalment amount that you need to pay every month.
Let’s get an overview of the instalment payments for a home loan of Rs. 1 crore in the case of different tenures! The interest rate is taken as 6.9% for the below-mentioned tenures.
|Tenure||EMI (in Rs.)|
Here is a list of some of the entities offering affordable home loan interest rates:
|Financial Institutions||Starting Interest Rates (per annum)|
|Kotak Mahindra Bank||6.55%|
Availing of a Rs. 1 crore home loan is a smart way of financing the purchase of your new house without draining your savings. Since purchasing a property is a long-term commitment, you need to know the EMI payable beforehand to make an informed decision and manage your expenses efficiently.
Ans: Fixed interest rates stay the same throughout the repayment tenure. RBI’s policy rate changes impact floating interest rates. A fall in the repo rate leads to a reduction in the home loan rate of interest and vice versa. Floating rates can be chosen when market rates are low. On the other hand, fixed rates are beneficial when the rates are about to rise in the coming years.
Ans: Benchmark lending rates can be one of the following:
Repo Linked Lending Rate: Such lending rates follow RBI’s policy rates and bear rapid adjustment with every variation in policy rates.
Marginal Cost of Funds oriented Lending Rate: MCLR is closely related to a bank’s cost of funds and repo rate. If the repo rate changes, it will impact the floating interest rates of home loans. In case any bank reduces MCLR, the floating interest rate of a home loan also decreases.
Ans: LTV (Loan-to-value ratio) decides the maximum sum that an applicant can borrow from a lender for purchasing a house. It depends on the present market value of a house property. The lower the LTV, the higher the chances of getting favourable terms and interest rates with regard to your home loan.
Ans: A house property’s amenities, present state and location impact the resale value. Resale opportunities also depend on a property’s age. When this resale value is high, financial institutions offer lower interest rates on loans and vice versa.
Ans: Home loan repayment tenure determines the following:
The time value for the amount given as advance
Lending risk for financial institutions
Thus, interest rates are lower for a short tenure and higher for a long tenure. Repayment periods and EMIs are inversely related.
Before you go…