EMI Calculator for Home Loan

Home loan EMI calculator is an important financial tool. It is helpful in calculating the Equated Monthly Installment (EMI) of the home loan. This gives the borrower a clear indication of the monthly outflows to repay the loan which is extremely helpful in budgeting. The Home Loan EMI calculator formula E = P x r x (1 + r) n / ((1 + r) n - 1) generates the result using three parameters namely, principal loan amount, the rate of interest and the loan term taken in months). Given the complexity of the Home Loan EMI calculator formula, the job can be best done using the Home Loan EMI calculator online.

Additional Info: Also check Rs. 1 Crore Home Loan EMI

EMI stands for Equated Monthly Installment (EMI). Once the borrower Apply for a Home Loan, the principal amount is approved at a rate of interest charged by the lending company. The cumulative total of the principal amount availed and the rate of interest thereon are to be repaid in the decided loan term. This repayment is done every month. The amount paid is called the Equated Monthly Installment or the EMI.

The home loan EMI is calculated using the Home Loan EMI calculator online. The Home Loan EMI calculator formula requires three inputs - principal amount, rate of interest, and the loan tenure in months. The resultant EMI corresponding to the input values is generated instantly. Users can change any or all of the input values to reach the ideal EMI amount.

 When using a home loan EMI calculator, you can reduce your Home Loan EMI by:

• Reducing the principal amount
• Lowering the rate of interest
• Opting for a longer loan tenure

The EMI value is made up of two components: the principal part and the interest component. Therefore, in addition to EMI calculation, the Home loan EMI calculator also helps understand the total cost of the loan.

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Home loan EMI is calculated using the Home Loan EMI calculator. Values of three variables - the principal amount, the Home Loan Rate of Interest, and the loan tenure are required to calculate the Home loan EMI. The Home Loan EMI calculator formula for the same is E = P x r x (1 + r) n / ((1 + r) n - 1). Though the calculation can also be done using the Home Loan EMI calculator excel sheet, the job is much easier when using the Home Loan EMI calculator online.

How to calculate EMI?

• In the Google Search bar start the search for Home Loan EMI calculator
• Open any Home Loan EMI calculator online
• Enter the value of the principal loan amount
• Enter the rate of interest at which the lending institution is offering home loans.
• Enter the number of months in which you wish to repay the loan.

On submission of the above parameters, the EMI value corresponding to the inputs will be generated by the Home Loan EMI calculator, instantly.

For instance:

The above calculations are calculated using rate of interest @ 8.50% per annum, the Lowest home loan Interest Rate Offered by HDFC Bank for a term of 20 years.

MyMoneyMantra is a renowned third-party aggregator. The portal brings together information about different financial products offered by registered lenders across India. The comprehensive database thus allows easy comparison of the product offered by different lenders. This equips the borrower to make an informed choice. The portal also provides easy access to online financial tools like the Home Loan EMI Calculator, Home Loan Eligibility Calculator, the Loan Prepayment calculator, etc. These financial tools make the borrower’s search for a home loan comfortable and cost-effective.

How to calculate Home Loan EMI using MyMoneyMantra's EMI Calculator? Here’s help:

• Log in to MyMoneyMantra’s official websitewww.mymoneymantra.com
• Move to the ‘Financial Tools’ tab
• Choose the ‘Home Loan EMI Calculator’ option from the drop-down menu
• Enter the ‘Loan Amount, Rate of Interest and Loan Tenure’ in the designated boxes.
• Submit information

The Home Loan EMI calculator at MyMoneyMantra generates results instantly. In addition to the total EMI value, Total Interest and the Total Payments, the break-up of the loan amount is also shown in the form of a pie chart.

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The Home Loan EMI is the monthly outflow that will be incurred for the entire loan period to repay the home loan. As it is a long term obligation, the Home Loan EMI amount must neither be too high or very low. This is because, if you opt for a higher EMI than your repayment capacity, it will increase your financial burden pushing you into a debt trap. On the other hand, choosing a very low EMI as per your repayment capacity will be the result of a uselessly long loan tenure. This will increase the cost of the home loan.

Additional Info: Also check SBI Home Loan EMI Calculator

Thus there are numerous ways in which the Home Loan EMI value can be reduced. These include:

• Opt for a Smaller Principal Amount – The principal amount has a direct bearing on the Home Loan EMI value. To reduce your EMI value, consider a smaller principal amount when you apply for a home loan.
• Pick the Lowest Rate of Interest – The higher the home loan interest rate, the higher will be the EMI value. The component of interest is the cost of the loan. Therefore, to keep both the cost of the loan and the EMI value low, opt for the lending company that offers the lowest rate of interest on the home loan.
• Increase the Loan Period – The home loan duration and EMI are inversely related. Once we increase the loan duration, the EMI value reduces and vice versa.
• Transfer Home Loan Balance to another Lender - By transferring the outstanding balance of the ongoing home loan to another lender that offers a lower rate of interest, one can reduce the EMI value. During balance transfer, the borrower can also increase the loan term to bring down the EMI value.
• Loan Prepayment – Loan prepayments are adjusted against the principal amount and therefore bring down the EMI.
• Switching over from Fixed to Floating Rate of Interest – Unlike the fixed rate of interest, the floating rate of interest changes with the fluctuations in the economy. They are linked to the MCLR (marginal cost of lending rate)-based interest rates. Any drop in MCLR rates will bring down the EMI value.

Home loan EMI calculator uses the mathematical formula E = P x r x (1 + r) n / ((1 + r) n - 1) to calculate the EMI. As seen, the Home Loan EMI calculator formula has three variables – P, r and n. While P is the principal amount, r is the rate of interest charged by the lending company annually, and n is the loan period in months. Thus, the value of EMI is dependent upon the values of these three factors.

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But each factor affects the value of the EMI differently. Let’s understand the effect of each variable on the value of the EMI:

Principal Amount: The amount of home loan that is approved and sanctioned is the principal amount. As the borrower applies for a higher principal amount, the corresponding EMI value also increases. Likewise, to keep the EMI value low and within budget, apply for a smaller home loan principal.

Loan Period: The number of years in which the home loan will be repaid is the loan period. The Home Loan EMI calculator requires this figure as the number of months. As the loan period increases, the EMI value will come down. The Rs. 20 Lakhs Home Loan EMI calculator will show the following results.

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The home loan interest rate is dependent on the lending rate fixed by the Reserve Bank of India. The lending company uses this as the base rate and adds its operational expenses to reach the rate of the figure at which it offers home loans.

The rate of interest at which the lender offers home loans is therefore dependent on the MCLR Rate. It is the rate below which the banks cannot lend. Borrowers who have a good credit score, meet the eligibility criteria, and have healthy long-drawn relations with the bank can avail of the loan at the lowest rate of interest.

Home loan interest is calculated as a percentage of the principal amount. The home loan interest is calculated on a reducing balance. Upon every EMI repayment, the principal component of the EMI break-up is adjusted against the principal amount. This reduces the outstanding principal amount.

By using the Home Loan EMI calculator at MyMoneyMantra one can know the amount of EMI, along with Total Interest and the Total Payments on the home loan principal amount for a decided rate of interest.

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Home Loan Amortization Schedule is the home loan repayment schedule. It is a tabular representation that shows the break-up of the two components of the home loan EMI Calculator– the principal amount and the interest portion.

The home loan amortization schedule enlists the following details:

EMI Installment Number – Every EMI instalment bears a unique serial number. Corresponding to each instalment number, the break-up details, due date, opening, and closing principal balance are mentioned.

Due Date – It is the date on which the EMI instalment will fall due.

Opening Principal Balance – It is the home loan principal amount that is outstanding at the start of the month. The home loan interest is calculated on this amount.

Instalment Amount – It is the value of the EMI amount payable. It is calculated using the Home Loan EMI calculator.

Principal Component – The part of the EMI that goes into repaying the principal loan.

Interest Component – The part of the EMI that goes into repaying the interest portion of the home loan.

Closing Principal – It is the principal amount that is outstanding after the payment of that month’s EMI. The closing home loan principal amount of one month is shown as the opening home loan principal amount for the subsequent month.