A home is more than just a place to live—it’s a dream, a comfort and a place to call your own. Whether you’re planning to buy a new home, renovate your current den, or start with new construction, a home loan can ease your financial burden. However, knowing your monthly EMI in advance is important. A home loan EMI calculator simplifies this by showing you exactly what your monthly payments will look like.
Let’s see how you can use the home loan EMI calculator to your benefit.
What is a Home Loan EMI Calculator?
The EMI calculator for home loans is an online tool that you can use to calculate your monthly home loan payments in advance. It calculates your home loan eligibility using the loan amount, interest rate, and loan term. Once you know your dream home EMI in advance, it will be easier to choose the loan provider.
The main purpose of a Home Loan EMI Calculator is to help you plan your budget by clearly showing your monthly payment.
It also helps you:
- See if the loan is affordable.
- Compare various loan offers.
- Plan your repayment schedule.
Home Loan EMI
With a home loan, you can easily manage your finances. It makes homeownership affordable with manageable monthly EMIs.
Basics of Home Loan EMI
Your EMI has two parts:
- Principal: The amount you borrowed.
- Interest: The cost of borrowing the money. Over time, the interest portion decreases while the principal repayment increases.
But for most of us, the preferred way is to calculate and compare which home loan offers the lowest EMI, right?
Gone are the days of manually calculating your home loan EMI. Why not use a home loan eligibility calculator instead?
Check it out!
How is Home Loan EMI Calculated?
Home loan EMI formula is –
P x R x (1+R)^N / [(1+R)^N-1]
where-
P is the principal loan amount
N denotes the loan tenure in months
R represents the Monthly interest rate
Note- The rate of interest (R) on your loan is calculated per month.
You can easily avoid manuualy calculating your house loan amount and EMI and use and online EMI calculator.
How to Use a Home Loan EMI Calculator
It’s easy to use a Home Loan EMI Calculator.
- Enter the Loan Amount: Input the amount you want to borrow.
- Enter the Interest Rate: Add the yearly interest rate currently being offered for the loan.
- Enter the Loan Tenure: Specify how long you’ll take to repay the loan (in months or years).
- Calculate: Press the calculate button and the EMI will be displayed instantly.
If you’re planning to take a home loan of ₹20 lakh at an interest rate of 8.7% per annum for five years, your monthly EMI would be approximately ₹41,226.
This is based on the loan amount, interest rate, and loan tenure, and it helps you understand the amount you need to set aside each month for repayment.
Home Loan EMI Calculator Benefits
Have a look at the multiple benefits of using a Home Loan Eligibility Calculator.
- A home loan EMI calculator gives you instant results on your monthly payment. It’s fast, reliable, and helps you plan your home loan better.
- By inputting details like principal home loan amount, interest rate, and tenure, you can see home loan EMI amounts that you will have to pay.
- You can adjust the loan amount or tenure to ensure the EMI fits within your monthly expenses.
- Many house EMI calculators also show the breakdown of interest and principal over the loan tenure. It becomes easier to understand the whole cost of borrowing the money.
- You can use the online home loan EMI calculator to compare different loan options from various lenders. This helps you choose the most affordable loan.
Using a home loan EMI calculator simplifies the entire process and ensures you’re making informed financial decisions.
Home Loan Amortization Schedule
A home loan amortisation schedule is a detailed breakdown of your loan repayments over time. It shows how much of each EMI (monthly instalment) goes toward paying off the loan amount (principal) and how much goes toward interest.
At the start of the loan, a large portion of your EMI goes toward interest.
Let’s use your example to explain the home loan amortisation schedule:
You take a loan of ₹20 lakh at an interest rate of 8.7% per annum for a tenure of 5 years. The monthly EMI is approximately ₹41,226.
The amortization schedule shows how much of this EMI goes towards the loan principal (₹20 lakh) and how much goes towards interest each month. In the beginning, a larger portion of your EMI goes toward paying the interest. As the loan progresses, more of your EMI goes towards reducing the principal.
For example, in the first EMI, most of ₹41,226 will cover the interest on ₹20 lakh, and a smaller part will reduce the loan balance. By the last EMI, the interest portion will be very small, and most of the ₹41,226 will go toward paying off the remaining principal.
- Early stage: High interest, low principal repayment.
- Later stage: Low interest, high principal repayment.
This helps you see how your loan gets repaid over time and how much interest you pay in total.
Types of Home Loans
These different home loan options give you flexibility based on your needs.
- Land Purchase Loan
This loan helps you buy a plot of land. Banks usually offer home loan for up to 85% of the land’s cost.
- Home Purchase Loan
The most common type, this home loan is for buying a new or pre-owned house. You can choose between a fixed or floating interest rate, and banks often lend up to 85% of the house’s value.
Fixed Rate: Your interest rate remains the same throughout the loan term.
Floating Rate: Your interest rate can change with market conditions. This can change your home loan EMIs.
- Home Construction Loan
If you want to build a house rather than buy, this loan covers both land and construction costs. The loan is based on the estimated construction cost and can be disbursed in stages.
- Home Expansion/Extension Loan
Need more space?
This loan covers adding new rooms or making structural changes to your existing home. It’s ideal for home renovations that require major expansions.
- Home Improvement Loan
If your house needs repairs, renovations, or upgrades like painting, plumbing, or electrical work, this loan can help cover the costs.
- Balance Transfer Home Loan
This option lets you switch your existing home loan to another bank offering lower interest rates. It’s a great way to reduce your overall interest payments.
- Bridged Loan
For those planning to buy a new home before selling their old one, a bridged loan provides short-term funds to cover the gap. It requires mortgaging the new property and is available for a short term of up to two years.
Pros and Cons of Long Tenure vs. Short Tenure Loans
When choosing between a long and short loan tenure, you must know the pros and cons:
- Long Tenure home loan
- Pros: Lower monthly EMI, which is easier to manage.
- Cons: You end up paying more in total interest over the loan’s duration.
- Short Tenure home loan
- Pros: Faster loan repayment and less total interest.
- Cons: Higher monthly EMI.
Conclusion
A home loan interest rate calculator is an excellent tool for anyone planning to buy or renovate their home. It is also useful for those considering taking a home loan for investment purposes. It helps you plan financially, provides accurate and quick results, and simplifies the comparison of different loan options.
You may also want to know the Car Loan EMI Calculator
FAQs| EMI Calculator for Home Loan
With a ₹50,000 monthly salary, you can generally get a home loan of ₹15-20 lakhs. However, the exact loan depends on your financial profile.
For a ₹20 lakh home loan at 8.75% interest over 20 years, the EMI would be approximately ₹17,674 per month.
A ₹10 lakh home loan at 8.40% interest over 10 years would have an EMI of around ₹12,345 monthly.
A ₹40 lakh loan at 8.50% over 30 years would give you an EMI of roughly ₹30,517 per month.
Yes, you can get a ₹30 lakh home loan if you meet the eligibility criteria like income and credit score.
______________________________________________________________________________________
Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.