Calculate your home loan eligibility, interest rate & EMI with Navi
Thinking of buying / upgrading your home? Have questions around your loan repayment schedule? Don’t worry, we’ve got you covered. Navi’s home loan EMI calculator helps you calculate your monthly EMIs accurately without any complex formulas or calculations.
Simply, add the loan amount, tenure of the loan and rate of interest. The calculator will instantly give you a snapshot of your monthly & yearly payment instalments.
For Indians, owning real estate is a life-long dream, the ultimate sign of social and financial security. A house is a sign of prosperity and most of us have a lifelong dream to have one. However, buying real estate has become costlier over the years, especially in metro cities. Home loans are perhaps the only way one can finance their dream of owning real estate.
Home loans are secured loan products offered by banks or NBFCs and other financial institutions, which also determine the rate of interest to be charged on the product.
Secured means that money for the home loan is offered against some sort of collateral as security. Which means, the property for which the loan has been taken is held as security by the financing institution until repayment of the loan is complete. When the homeowner is unable to repay his debts, the loan provider reserves the right to sell off said property to recover its dues.
Three important factors determine one’s EMI - the interest rate charged by the home loan provider, the loan amount and the tenure. Changes to any of these factors or even specific policies set by the loan provider can impact one’s home loan repayment installments. We have discussed the most important factors in detail below:
Interest rate changes:These impacting EMIs are a given when one opts for floating interest rate products. However, whether the change is a positive development or not depends on the direction of interest rate changes. For example, if interest rates are in a downward trajectory, floating rate loan borrowers are better placed to take advantage of the scenario than their counterparts with fixed interest rate products.
Change in loan tenure:Funds one can set aside monthly towards repayment of one’s home loan depends on an individual’s monthly expenses, among other things. As such, increasing the tenure of the loan allows one to make smaller EMI payments. However, a longer tenure also means higher interest payment on the principal loan amount throughout the tenure, making the loan more expensive.
Prepayment:This allows borrowers to cut short the loan tenure and save money on interest payments. This is called prepayment. However, since it means a loss of interest income for the home loan provider, they often charge a penalty on prepayment of loans. Some lenders levy prepayment penalties, borrowers should be wary of this.
Step-up or step-down loans:Step-up loans are structured to allow smaller EMIs initially, with the repayment amount going up as time progresses. Inversely, step-down loans start with higher EMIs at the beginning of the tenure and get smaller towards the tenure end.
Switching home loan providers:Alert borrowers can save money by transferring their home loan balance to a new loan provider who is charging a lower interest rate. However, the transfer also involves a cost. This is also called a balance transfer.
Home loans are repaid in equated monthly installments or EMIs, which can be determined based on the total loan amount borrowed, the rate of interest, and the loan tenure.
Purchasing a home is a life-changing event, and the responsibility of paying back a home loan is perhaps one of the largest and longest financial endeavors one undertakes in their adult life, involving complex calculations.
Home loan EMI calculators help determine one’s EMI with minimum inputs and give the potential borrower a breakdown of the interest payment due on their home loans, along with the monthly repayment obligations.
Online calculators use the formula mentioned below to determine the home loan EMI amount.
E = [P x R x (1+R) ^N] / [(1+R) ^N-1]
Alternatively, you can use the following formula in excel:
=PMT(rate, tenure in months, principal amount, 0)
Any online home loan calculator uses the above formula and gives two relevant outputs—the repayment amount due each month, and the total amount they will have to repay (split by principal and interest) before their loan can be considered fully paid and the house entirely in their possession.
A home loan calculator instantly helps make these complex financial calculations, helping one save time and the hassle of going through complex mathematics several times over.
More importantly, it gives the potential borrower a snapshot of their monthly repayment obligations over the next couple of decades, helping them make an informed financial decision.