What is a Home Loan EMI Calculator?

The Home Loan EMI calculator is an online tool that a borrower can use to check accurate estimation of the equated monthly installments (EMIs) payable for a specific amount of loan. This EMI calculator takes into consideration the loan amount, the interest rate charged by a bank or lending institution, and the tenure of repayment. It then computes the amount of EMI a borrower has to pay every month basis on the selected tenure.

How to Calculate Home Loan EMI?

The home loan EMI calculator considers three variables: the loan amount, interest rate, and tenure. The interest rate could either be fixed or floating. While a borrower can manually calculate the home loan EMI, it can take considerable time to do so and the possibility of an error also remains. 

An online EMI Calculator for home loan can be used following these three simple steps:

• Step 1: Choose the loan amount you need by adjusting the slide bar accordingly
• Step 2: Move the slide bar to choose the appropriate loan tenure in years
• Step 3: Use the slide bar to select the home loan interest rate

The home loan EMI calculator will then display you the results with the EMI payable within a few seconds.

Home Loan EMI Calculation Formula

The formula used for Home Loan EMI Calculation is as follows:

EMI = [P x r x (1+r)^n]/[(1+r)^n-1]

In which,

• P = loan amount
• r = monthly interest rate calculated monthly
• n = loan duration in months

Example for Home Loan EMI Calculator

Let’s assume that an individual borrows a home loan of Rs 75 lakh for a duration of 20 years or 240 months at an interest rate of 8% per annum. 

Using the formula for EMI calculation:

EMI = [P x r x (1+r)^n]/[(1+r)^n-1]

EMI = [ 75,00,000  x  0.08/12 x (1+ 0.08/12)^240]/[(1+0.08/12)^240-1]

EMI = [ 75,00,000  x 0.0066 x (4.926802]]/[3.926802]

EMI =  62,733 (approximately)

How can the home loan EMI calculator help you?

While opting for a home loan, the home loan equated monthly instalment (EMI) is an important factor to take stock of. 

Typically, an EMI is a fixed amount (comprising two components: principal and interest) that a borrower must repay to a lender every month until the completion of the loan tenure.

The manual calculation of EMI and its components can be both a tedious and time-consuming affair. Also, the possibility of error remains high in this case.  Using a home loan EMI calculator can help in saving time for prospective borrowers. It also provides an accurate estimate that is crucial for financial planning. 

The home loan EMI calculator can help you in the following ways:

• Determine the amount to borrow depending on your monthly budgetary needs
• Adequate financial planning for timely EMI payments and ensure repayment of the home loan
• Take steps for prepayment of a loan

Home Loan Amortisation Schedule

Let’s assume that a borrower takes a home loan of Rs 30 lakh for a 15-year tenure at an interest rate of 8.5% per annum. The sample amortisation schedule for the same would be as follows:

How to use Home Loan EMI Calculator?

A home EMI calculator can be used by following a few simple steps:

• Step 1: Choose an online house EMI calculator. There are several options available online to choose from. Most of these home loan EMI calculators are fairly simple to use and calculate the loan EMI instantly. 
• Step 2: Enter the amount of loan you look forward to borrow from the lender.
• Step 3: Enter the repayment period (in years) and the rate of interest charged by the lender.

The home loan calculator will display the results immediately. One can also change the inputs and the calculator will highlight the EMI, interest payable, and total payable amount basis this.

How to calculate home loan eligibility

A home loan eligibility calculator can be of aid in simplifying the calculation of home loan eligibility. This online tool can highlight an estimate of the loan amount a borrower qualifies for, along with the corresponding interest rate.

The results generated by an home loan eligibility calculator are dependent on the specific details a borrower provides. These include the Gross Monthly income of the borrower, tenure for which a borrower wants to take loan, Interest rate and the current monthly EMI (if you are paying). On the basis of this information, the calculator will show the amount you are eligible to take as a Home Loan. 

However, home loan eligibility calculators may vary in terms of the required inputs. To ensure accuracy and certainty, it is suggested  to directly engage with a lender and seek confirmation regarding eligibility. 

Benefits of using home Loan EMI Calculator

The benefits of using the home loan EMI calculator is as follows:

• Easy-to-use tool: Enter the loan amount, interest rate, and tenure, the home loan EMI calculator online will computate and produce the results in a short period.
• Gain insight into the breakup of finance charges: The online tool helps a borrower get a clear picture of the financial costs, such as it provides the break of total payable amount; Principal Loan amount and Payable interest amount. 
• Comparison of loan offers: One can compare loan offers from various banks. The results will highlight the total cost of each loan along with their respective EMIs. This will help a borrower zero in on the appropriate feasible option.
• Choosing the right tenure: Knowledge related to EMI from the home loan EMI calculator India also aids a borrower in choosing the right tenure. In case an individual can afford to pay a higher EMI, they can choose a shorter loan period and pay off the loan at the earliest. Otherwise, a borrower can pay a more comfortable EMI and extend the loan tenure.
• Helps with loan management: There is a possibility that while paying EMIs, a borrower may possess some extra funds to make prepayments. In case an individual wishes to revisit the financials and check how prepayments can help to pay off the loan before the term ends, the home loan EMI calculator can be of help in this regard.

Factors affecting Home Loan EMI

A few of the factors that tend to influence the home loan EMI are as follows:

• Principal amount: This relates to the amount that one borrows from a lender. It is directly proportional to the EMIs. This means the lower the principal, the lower the monthly instalment, and vice-versa. 
• Rate of interest: The loan interest rate is the rate at which a lender provides a home loan. This is also directly proportional to home loan EMIs.
• Tenure: This refers to the time within which a borrower repays a home loan. It is inversely proportional to EMIs. This means the longer the tenure, the smaller EMIs will be. However, it is important to note that a longer tenure translates into a high-interest outgo.  

Home loan Repayment Plans

Home loan repayments are usually in the form of equated monthly instalments (EMIs) for a fixed tenure. A borrower can manage their debt effectively by either opting for the right plan or by reducing their obligations early.

A borrower has the option to prepay partially or fully, opt for a longer tenure, shift to another loan, or go in for a top-up or balance transfer for lower interest rates and more flexible terms. However, one of the most ideal ways to gain early relief from these obligations is via a selection of a home loan repayment plan that suits an individual’s financial needs.

• Go in for a moratorium plan: Although home loan repayment periods are fixed based on tenure; many lending institutions offer repayment plans which offer moratorium.  This means no principal repayment for a fixed period. The initial burden is reduced this way by extending the EMIs for a longer term.
• Increasing EMI plan: One of the most common home loan repayment options is when the EMIs increase over a period after consideration of an individual's likely future growth. However, this may increase the financial stress at a later date.
• Decreasing EMI plan: Conversely, the decreasing EMI plan allows an individual to make higher repayments initially, thereby reducing the burden at a later phase. This plan is beneficial in case an individual’s expenses and other financial obligations in comparison to their income are lower, allowing them to repay higher payments smoothly. 
• Longer home loan repayment tenure: While most lending institutions offer a home loan repayment period ranging from 20 to 30 years, a few provide higher tenures for repayment, which provides a boost to an individual’s eligibility. Apart from flexibility, it also reduces the financial stress for a borrower. 
• Waiver of EMIs plan: A few lenders offer plans in which EMIs of up to 6 months are usually waived. The idea is to incentivize good financial discipline.  With a satisfactory record  in servicing  home loan repayments of up to 10-15 years, an individual is eligible for such waivers.
• Under-construction home loan repayment plan: In the case of an under-construction project, the entire disbursement is not initiated despite the home loan being availed. 

During this period; an individual can opt for the commencement of payment of obligations till such disbursement is made; thereby, reducing the financial stress after the entire construction. In such a scenario, the amount is first adjusted towards interest and then principal.

Most individuals who do not have any specific terms attached to them opt for an equated home plan repayment plan. However, depending on a financial condition; an individual can go in for any of the aforementioned plans to ensure repayments smoothly.