The Central Government’s Digital India initiative and reduction in interest rates have contributed significantly to the growth of the home loan sector. According to recent reports, the affordable housing loan segment witnessed a growth of nearly 8% between FY20 and FY21.
However, it has also been noticed that the small-ticket loan segment, for instance, Rs. 10 lakh home loans has the highest delinquency rate. To curtail such issues in future, the first step will be to assess your monthly obligations using an EMI calculator.
This article reflects on the usage and benefits of the EMI calculator for Rs.10 lakh home loan.
Loan Amount
Rate of Interest (P.a)
%
Loan Tenure (Years)
Years
Monthly EMI
0
Total Interest
Total Amount
The EMI formula used in the calculation is —
EMI = P x R x (1+R)^N / [(1+R)^N-1]
In this formula, the key components are:
Using this formula, if you assume that a person is availing a Rs. 10 lakh home loan for 12 years at 6.7% interest rate, the EMI components will be:
Now, the EMI calculation will be —
EMI = 1000000 x 0.55 x (1+0.55)^144 / [(1+0.55)^144-1] = Rs. 10,125
It is necessary to have a proper repayment strategy before you get yourself into long-term commitments like a home loan. In that regard, it is essential to evaluate your EMIs. Even though you can calculate your monthly obligations manually, the financial tool remains more advantageous. Here are some reasons why:
In order to evaluate your equated monthly instalment for an Rs. 10 lakh home loan, you need to provide certain values first. With an EMI calculator, you just need to enter these values starting from the principal amount first. Apart from that, you also need to provide the rate of interest your current lender is charging and the number of years you are given to repay the home loan.
When you are applying for a home loan, it is expected that you will need to compare different combinations of loan amount and repayment tenure. This helps in deciding how much you will be able to bear for that specified period. Since this particular financial tool is free to use, you can compare different combinations of principal amount and tenure as many times as you want. You get the results almost instantly, enabling you to make a decision quickly.
Apart from the monthly instalment amount, this financial tool also provides a loan amortisation schedule. It consists of the breakup of the principal component and interest of your loan. This allows you to understand how much of a specific month’s EMI is going towards the interest payment and principal repayment.
Additionally, one of the key benefits you get while using an EMI calculator is accuracy. Despite providing instant results, such financial tools ensure that the calculated EMI amount is error-free.
The table below shows the banks and NBFC’s interest rates and the processing fees they charge for Rs.10 lakh home loan:
Lending Institutions | Interest Rates Starting From (per annum) | Processing Fees |
Navi Home Loans | 7.39% onwards | Check with lender |
Kotak Mahindra Bank | 7.50% onwards | 0.5% |
Axis Bank | 7.60% onwards | 1% |
Yes Bank | 8.95% onwards | 1.5% |
ICICI Bank | 7.60% onwards | 0.5% – 2% |
HDFC Bank | 7.55% onwards | 0.50% |
Bank of Baroda | 7.45% onwards | 0.50% |
Bank of India | 7.40% onwards | 0.25% |
LIC Housing Finance | 7.50% onwards | Check with lender |
Federal Bank | 8.55% onwards | 0.50% |
Union Bank of India | 7.40% onwards | 0.50% |
Reliance Home Finance | 9.75% onwards | 0.5% – 1% |
Disclaimer: Note that this table is for educational purposes only and the final rate offered is solely at the concerned lender’s discretion. Navi doesn’t take responsibility for any interest rate changes that may occur in the due course of time.
Most lenders try to keep their eligibility parameters flexible in order to help borrowers finance the purchase of a new home However, you should go through the following criteria before applying for a home loan:
Criteria | Requirement |
Age | 21 years to 65 years |
Nationality | Indian resident or non-resident Indian |
Employment | Employed in the private or public sector |
Minimum income | Varies across lenders and cities. Generally, salaried employees should be earning Rs. 20,000 per month |
Work experience | At least 2-3 years |
Credit score | 750 or above |
Co-applicants for a joint loan | Spouse, parents, children, and siblings |
Criteria | Requirement |
Age | 21 to 65 years old |
Nationality | Indian resident or non-resident Indian |
Minimum income | Varies across lenders and cities. Generally, a self-employed individual should be earning Rs. 3 lakh annually |
Work experience | Should be running the business for a minimum of 5 years |
Credit score | 750 or above |
Note that the eligibility requirements vary across different lenders.
Many advancements are seen in the borrowing system today, and the lenders now offer home loans with minimal documentation. Borrowers need not worry about any paperwork and can receive financial help without any visiting to offices. Nonetheless, you will need to furnish certain necessary documents, like the following:
For Salaried
For Self-employed
To help you get a better understanding of EMI calculations, here’s is an illustration of how much the EMIs would be for Rs.10 lakh home loan for 5 years, 10 years, 15 years and 20 years. Here, the repayment tenure will differ while the principal amount and interest rate will remain unchanged.
Amount | Tenure | Interest Rate* | EMI |
Rs.10 lakh | 5 | 7% p.a. | Rs.19,801 |
Rs.10 lakh | 10 | 7% p.a. | Rs.11,611 |
Rs.10 lakh | 15 | 7% p.a. | Rs.8,988 |
Rs.10 lakh | 20 | 7% p.a. | Rs.7,753 |
*Note that this is for illustrative purposes only.
Follow these steps to use Navi’s interest calculator and get the EMI value of a Rs. 10 lakh home loan:
Step 1: Visit the online portal of Navi and choose ‘home loan’ from the tab.
Step 2: Now, you need to click on the ‘EMI calculator’ option.
Step 3: Here, you need to provide the necessary values to calculate your equated monthly installment amount. Make sure you are entering accurate inputs.
Step 4: After providing these values, click on ‘Submit’ to get the exact EMI result.
To obtain a Rs.10 lakh home loan without any hassles on Navi’s technology-driven platform, follow these steps:
Step 1: Install the Navi app.
Step 2: Open the app and register yourself as a user by entering your mobile number.
Step 3: Choose the option of “Home Loan”.
Step 4: Now, put in property location as, choose the type of property you are purchasing and mention its address.
Step 5: Finally, provide your personal information, like PAN, Aadhaar number, and your employment information.
Step 6: Upon submitting your property documents, your application will be completed. Navi will verify your documents and instantly approve your loan.
A clear understanding of the amount you will have to pay every month for a specified period of time helps in managing your finances better. Based on that, you will be deciding the loan amount to avoid a debt trap.
Even for small-ticket credit facilities, like a Rs.10 lakh home loan, assessing EMI is necessary for better financial planning. With an EMI calculator, the process of making a decision and planning the repayment becomes much easier.
Ans: In the case of home loans with a floating interest rate, the EMIs change depending on the market situation. This means whenever the home loan interest rates change due to the changing nature of the market, it automatically influences the EMI value.
The Government of India extends several tax benefits on home loans in order to help citizens reduce their tax obligations. For instance, u/s 80C of IT Act, 1961, individuals availing home loans get to claim a deduction of up to Rs. 1.5 lakh. Note that this will be available on the principal amount only. Other than that, Section 24b of the IT Act also allows home loan borrowers to claim a tax deduction of up to Rs.2 lakh on the interest payment.
Some financiers follow a specific norm; they disburse the total loan amount in stages. In such cases, home loan borrowers need to start paying the equated monthly instalments only after getting the full amount disbursed. Till then, they only have to pay the interest applicable on amounts that have been disbursed. This can be referred to as pre-EMI.
Missed EMI payments definitely make a negative impact on borrowers’ credit profiles. In order to ensure that you do not fail to pay your EMI on the specified date of each month, assess your EMI obligations beforehand and plan accordingly.
Almost all financiers have the home loan EMI calculator tool available on their websites. You can simply visit the online portal of your preferred lender and use this financial tool from there to compute the EMIs.
Are you looking to buy that house you’ve been eyeing 🏠 and you need a loan of up to ₹5 crore. Install the Navi app now and get instant in-principle approval right away! Interest rates starting at 8.74% p.a.
Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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