Online Home Loan EMI Calculator – Formula and Steps To Use
A home loan EMI calculator allows you to determine the loan instalment amount or EMI towards your home loan. It is an easy-to-use digital tool, which helps you make informed decisions when buying a residential property.
In addition, having prior knowledge of your home loan EMI allows you to chalk out the following:
- Affordability of a home loan
- Deciding the down payment for your home loan
- Effective financial planning to ensure timely repayment
Home Loan EMI Calculator
Loan Amount
Rate of Interest (P.a)
%
Loan Tenure (Years)
Years
Monthly EMI
0
Total Interest
Total Amount
Formula for Home Loan EMI Calculation
To calculate their home loan EMI, individuals can use the following formula:
| EMI = [PxRx(1+R)^N] / [(1+R)^N-1] |
In the above formula, ‘N’ represents the total number of monthly EMIs, and ‘P’ is the principal or loan amount. Moreover, ‘R’ refers to the rate of interest per month. So, if the interest rate per annum is 13%, the value of ‘R’ will be 13/(12 x 100).
How Does a Home Loan EMI Calculator Work?
Home loan instalment calculators are extremely easy to use. All you need to do is to enter a few details pertaining to the loan amount, interest rate, and tenure. Once done, you will get your EMI details almost instantly.
Example: Let’s say you are planning to take a loan of Rs. 30 lakh at an interest of 7% p.a. for a tenure of 10 years. Enter the details in the calculator. Your EMI will come up to Rs. 34,833.
Here’s what your repayment schedule would look like:
| Year | Principal Paid (Rs.) | Interest Paid (Rs.) | Total Payment (Rs.) | Outstanding Balance (Rs.) |
| 2022 | 1,23,473 | 1,20,356 | 2,43,829 | 28,76,528 |
| 2023 | 2,23,723 | 1,94,272 | 4,17,995 | 25,52,807 |
| 2024 | 2,39,893 | 1,78,096 | 4,17,989 | 24,12,914 |
| 2025 | 2,57,236 | 1,60,755 | 4,17,991 | 21,55,678 |
| 2026 | 2,75,833 | 1,42,160 | 4,17,993 | 18,79,747 |
| 2027 | 2,95,772 | 1,22,220 | 4,17,992 | 15,84,076 |
| 2028 | 3,17,152 | 1,00,838 | 4,17,990 | 12,66,924 |
| 2029 | 3,40,079 | 77,910 | 417,989 | 9,26,845 |
| 2030 | 3,64,664 | 53,327 | 4,17,991 | 5,62,181 |
| 2031 | 3,91,025 | 26,965 | 4,17,990 | 1,71,556 |
| 2032 | 1,71,157 | 3,007 | 1,74,164 | 0 |
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Factors Affecting Home Loan EMI
There are several factors that affect one’s EMIs on a home loan, such as the following:
1. Principal Amount
It refers to the sum that you borrow from a lending institution. The principal is directly proportional to EMIs, i.e., the higher the principal amount, the more will be your monthly instalments.
2. Loan Tenure
Tenure is the specified period of time within which you should repay a home loan. The longer the tenure, the lower will be your payable EMIs. However, with a longer tenure, you will have to pay more interest on your home loan.
3. Rate of Interest
The interest rate is the rate at which a lending institution extends you a home loan. It is also directly proportional to the amount of your EMIs. Therefore, when you take a home loan at a high rate of interest, you end up paying a higher EMI.
What Is Home Loan Pre-EMI?
Pre-EMI is an alternative that individuals can choose when availing of a home loan for a property that is under construction. In the case of pre-EMI, a lender makes a partial disbursal of the loan amount, and the borrower has to pay only its interest component until the entire sum is repaid.
Are There Any Tax Benefits of Paying Home Loan EMIs?
Taxpayers can claim the principal portion of EMIs paid for a financial year as a deduction under section 80C of the Income Tax Act, 1961. The maximum sum that can be claimed under this section is Rs. 1.5 lakh.
That said, one can only claim this deduction if his/her residential property is not sold within 5 years of possession. In addition, this deduction is applicable for self-occupied as well as let-out properties.
On the other hand, the interest portion up to Rs. 2 lakhs can be claimed as a deduction under section 24 for a self-occupied residential property. Furthermore, in the case of a let-out property, there is no upper limit on the interest that can be claimed.
How To Reduce Home Loan EMIs?
When it comes to reducing your home loan EMI, you can employ the following tips:
1. Pay More As Down Payment
When taking a home loan, it is wise to contribute more from your own pocket as a down payment. By doing so, you can reduce the loan amount, which then lowers its interest and EMIs.
2. Complete Partial and Periodic Payments
Another way to reduce the EMI is to make partial prepayments periodically. Moreover, when you prepay a home loan, you pay off its outstanding principal sum.
3. Make an Extra EMI Payment Every Year
When you pay an additional monthly instalment, the total interest outgo reduces, which leads to more savings. Many lenders allow you to revise your EMI payments. So, if you get a higher salary, you can also increase the EMI amount to reduce the overall interest.
Steps to Use Home Loan EMI Calculator
For the home loan EMI calculator, simply put the following details:
- Loan amount
- Interest rate
- Tenure
Once done, the calculator will show your EMI details.
Advantages of Home Loan EMI Calculator
A home loan calculator comes with these benefits:
- Provides you accurate figures in a matter of seconds
- Eliminates complex manual calculations and room for errors
- Helps you compare and plan your home loan
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Final Word
Purchasing a home is a long-term financial goal for many, and availing of a home loan allows them to achieve it. However, before applying, it’s best to compare home loans offered by different lenders so that you can make an informed decision. To do that, take the help of a home loan calculator, always.
Want to get loan approval for your dream home in less than 5 minutes? Download the Navi app right away! Navi offers home loans up to 90% of the property value at attractive interest rates and flexible repayment tenures of up to 25 years.
FAQs
Ans: A home loan EMI is due at a fixed date every month. You will be notified about this date when the home loan is disbursed.
Ans: The required set of documents needed for a home loan varies with different lending institutions. Generally, one must furnish his/her bank statements, income statements, credit report, identity proof, and address proof.
Ans: Salaried individuals, as well as self-employed professionals and non-professionals, can apply for a home loan.
Ans: Yes, one can avail of a home loan for the purpose of repair, renovation, construction, and home extension as well.
Ans: It is a tally of all EMI payments of a home loan and shows a detailed breakdown of interest and principal components of each instalment.
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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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