When you decide to apply for a home loan, the amount that will be sanctioned depends on a few factors, such as your monthly income, credit score, age, the cost of the property, and finally as well as most importantly, your ability to pay the EMIs.
Therefore, knowing how to calculate the home loan EMI amount – either offline or with an online housing loan EMI calculator – for your home loan is essential as it will determine whether you can afford the loan amount or not.
How to Calculate Home Loan EMI?
- Online through EMI calculators or home loan EMI calculators
- Offline, with the help of the EMI formula
Offline EMI Calculation with the EMI Formula
|EMI = [P x R x (1 + R) N] / [(1 + R) N – 1]|
- P = Principal or loan amount
- R = Annual Rate of Interest divided by 12 or the applicable monthly home loan interest rate
- N = Number of EMIs or the loan tenure divided into months
Let us understand this calculation with an example:
Mr Sinha took a home loan of ₹1 crore for a tenure of 20 years at an annual interest rate of 10%.
P = 1,00,00,000
R = 10/12 = 0.833% = 0.008331250 (after dividing by 100 to convert from percentage)
N = 20 years divided into months = 240 months
Thus, applying the formula:
|EMI = [P x R x (1 + R)N] / [(1 + R)N – 1]|
[10000000 x 0.008331250 x (1 + 0.008331250)240] / [(1 + 0.008331250)240 – 1]
(1 + 0.008331250)240 = 7.322
EMI = (10000000 x 0.008331250 x 7.322) / (7.322 – 1) = 96,490.69
Thus, as per the EMI calculation, Mr Sinha will have to pay a monthly EMI of approximately ₹96,491. He can round off the amount for ease of calculation and pay a monthly EMI of ₹96,500.
You can use the above formula to make an EMI calculator in Excel and calculate your EMI with different loan amounts, tenures, and interest rate combinations.
Online EMI Calculation with the Housing Loan EMI Calculator
There is a slew of online home loan payment calculators, that can help you calculate your EMI in just a few clicks. You can visit any of the loan aggregator websites or lending institution’s (bank, NBFC, housing finance corporation) websites and simply input your loan amount, tenure, and rate of interest.
The housing loan EMI calculators will, with just a single click, provide not only the EMI amount but also the total interest payable and the total loan amount payable (interest + principal).
You can also find housing loan eligibility calculators online that not only serve as home loan EMI calculators but also help you check your loan eligibility.
In the current market, buying a home entails availing of a home loan so that you can invest in your dream home. When you take a loan, it is your responsibility to repay it in time. Therefore, calculating the EMI helps you plan your repayments better by modifying your budget and financial plan.
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Frequently Asked Questions
What is home loan EMI?
When you take a home loan, you need to pay the principal amount and the interest back through monthly instalments, which are divided equally across the loan tenure. These are your Equated Monthly Instalments or EMIs.
What is a home loan EMI calculator?
An online housing loan EMI calculator is a feature provided by home loan lending institutions and aggregator portals. This calculator allows you to determine the exact EMI outflow based on your home loan amount, tenure and rate of interest.
Why Should You Calculate Your EMI Before Applying for a Loan?
- When you calculate the EMI amount, you can decide the exact loan amount you can afford to take from the lender. Also, it helps you choose the right tenure, as a higher tenure equals lower monthly EMIs.
- Knowing your approximate monthly EMI outflow helps you restructure your financial plan to make room for the monthly EMI payments.
Disclaimer: This article is based on the information publicly available for general use. We do not claim any responsibility regarding the genuineness of the same. The information provided herein does not, and is not intended to, constitute legal advice; instead, it is for general informational purposes only. We expressly disclaim any liability, which may arise due to any decision taken by any person/s basis the article hereof. Readers should obtain separate advice with respect to any particular information provided herein.