Home loans are secured loans that help borrowers purchase a property. To repay the loan, borrowers have to pay Equated Monthly Instalments (EMI) throughout the loan tenure. To avail ₹20 lakh home loan, financial planning and EMI calculation are of the utmost importance. Paying monthly EMIs make it easier for the borrower to repay the loan on time. Read on to know how a home loan of ₹20 lakh can help, interest rates, EMI calculator and its benefits.
Whether you want to renovate your house or buy an apartment, a loan of ₹. 20 lakh can help achieve your goal sooner. Home loans also offer additional benefits such as tax deductions, PMAY benefits, and more. With the digitisation of the lending world, you can easily apply for ₹ 20 lakh home loan from the comfort of your home.
Here is a table of top financial lenders and the interest rate they charge on a Rs. 20 lakh home loan.
|Lenders||Interest Rate p.a. on Rs. 20 Lakh|
|State Bank of India||6.80% – 7.15%|
|Navi||Starting from 6.46%|
|HDFC Bank||6.80% to 7.30%|
|Axis Bank||6.75% – 7.10%|
|Bajaj Finserv||Starting from 6.70%|
A vital part of financial planning while obtaining a home loan is calculating the EMI amount one has to pay.
Manually calculating home loan EMIs can be a daunting task. To make it easier for you, most financial institutions provide an easy-to-use home loan EMI calculator. By analysing the loan amount, tenure and interest rate, this tool informs you about the monthly instalment and interest you will have to pay.
Thus with this information, you can plan your budget to meet your long-term financial goals. Moreover, it also helps you analyse if you are eligible for obtaining a certain loan amount. So, it saves you from losing money in the form of loan processing fees if the lender decides that you are ineligible.
An EMI calculator works on a standardised formula that provides you with accurate results specific to home loans. By inputting all the values, you can get your EMI result.
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
P = Principal Amount
R = Rate of Interest
N = Loan Tenure
Let’s understand how this calculating tool helps you with an example. Raghav wants to purchase a new house before his wedding. So, he thinks about applying for a home loan of Rs. 20 lakh. His lender offers him this loan at an interest rate of 7% p.a. and for a tenure of 10 years.
By inputting these values, we get
EMI = [Rs. 20,00,000 x 7 x (1+7)^10]/[(1+7)^10-1]
= Rs. 23,222
Thus, using this calculator, Raghav realises that he needs to pay an EMI of Rs. 23,222. As he is in a very early stage of his career, he decides that this amount is too much for him. Now he can go forward and look for a loan that fits his budget.
Even though reducing your tenure will drastically decrease the interest you pay. But you will have to pay higher EMIs to repay your loan sooner.
Thus, choosing a good balance between EMI and tenure is important. Let’s consider Navi’s interest rate of 6.46% and see the EMI you will pay on a home loan of Rs. 20 lakh for various tenures.
|Loan Tenure||EMI Payable|
|5 years||Rs. 39,095|
|10 years||Rs. 22,669|
|15 years||Rs. 17,378|
|20 years||Rs. 14,864|
|25 years||Rs. 13,454|
You can follow these steps to use Navi’s home loan EMI calculator:
Note that you can readjust all the values and try different combinations to choose a satisfactory loan offer. Furthermore, you can also use this calculator by downloading the Navi app on Android or iOS.
Getting a home loan in today’s world is extremely convenient. With flexible eligibility criteria and minimum document requirements, there is no better time to obtain Rs. 20 lakh home loan.
However, borrowers need to remember that opting for a high amount loan should not be a hasty decision. After all, they might be repaying this loan for the next two decades. Thus, using an EMI calculator will save them from causing a massive dent in their savings and monthly income.
Various factors impact your monthly repayments. Primarily, EMI depends on the loan amount, tenure, and interest rate. Lenders also pay attention to your credit score, income, and age while deciding how much a loan will cost you. Note that prepayment of the outstanding amount can lower your EMIs.
As the name suggests, a pre-approved home loan is a loan given before you finalise your property deal. This borrowing option only requires your income and personal details, not your property documents. However, most pre-approved home loans come with a tenure of six months, before which you should finalise your property.
Generally, most banks charge a processing fee, which is 0.25% to 3% of the loan amount. However, under no circumstances is this fee returned to the borrowers. It is a one-time non-refundable payment. So even if your lender rejects your loan application, you cannot get the processing fee back.
As the formula used to calculate the home loan EMI is standardised, it can be used for all types of loans. Thus, you can use a home loan EMI calculator to analyse your personal or car loan monthly instalments.
Each lender sets a different limit to the loan tenure that they offer. Generally, the maximum repayment period for a home loan can range from 20 years to 30 years. For example, at Navi, you can get a home loan for a tenure of 25 years.
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