Monthly EMI

Total Payable amount

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A home loan EMI calculator helps compute the monthly instalments that a borrower needs to pay against the total amount availed. Such a tool assists you in making an informed decision about the outflow towards the home loan every month.

To identify your home loan EMI, you need to fill in the following -

- Loan Amount: The total amount that you need to avail for your property.
- Loan Tenure: You would be required to furnish the desired loan term (in years). A longer tenure helps in reducing the monthly EMI.
- Interest Rate: Input interest rate.

What is an EMI?

EMI stands for equated monthly installments. As a borrower, you need to pay the lender a fixed amount every month on a specified date. The EMI is the sum total of the principal amount and the interest amount divided over the tenure of the loan. However, your monthly value is fixed for each month, the principal amount paid and interest amount paid changes every month. For the first few years, the interest portion is higher. With time, the interest amount keeps reducing and principal amount keeps increasing. Therefore, your 70-75% interest will be paid in the first few years of the entire loan tenure.

What is a Home-Loan EMI?

Home loan is a loan taken from any financial institution for buying a house. The EMI that is calculated for this loan is termed as a Home loan EMI.

What is Pre-EMI?

For home loans disbursed against an under-construction property, the lender can offer an EMI that begins once the construction is complete. Until then, you can pay just the interest part of the loan that is termed as a Pre-EMI. Pre-EMI amount is less than full EMI amount since you will be paying just the interest component of the EMI and the principal loan amount remains intact. The Pre-EMI duration is not a part of your home loan duration. Let’s take an example to understand this better. Say you have a loan of 15,00,000 lacs for 20 years on a property that gets completed in 3 years. Your calculated EMI is Rs. 25,000/-. During these 3 years you can pay the interest part of the EMI. That would be your Pre-EMI and the total loan duration would be 23 years (20+3).

Should I opt for Pre-EMI?

You should opt of Pre-EMI if:

- If you wish to save money during the pre-EMI period and invest it in such a way that they get good returns on the amount saved.
- If you wish to sell your property once the construction is complete.
- If you are waiting for an income change and feel now it is not possible to afford a full EMI.

How is home loan EMI calculated?

EMI is calculated using a simple mathematical formula, that is EMI Amount = [P x R x (1+R)^N]/[(1+R)^N-1]. Here P stands for the principal loan amount, R is the rate of interest and N is the number of years for which the loan is taken. The value of the EMI changes according to these variables.

How is EMI interest calculated?

When you borrow a home loan you pay back both the components. These are the principal amount and interest amount. The principal amount is the amount that you borrow. The interest amount is a fee that you pay for using the bank’s/financial institutions money.
The EMI that you pay consists of two parts. A part of it consists of the principal amount and the other half consists of the interest amount.
To calculate the interest you are going to pay, you can use the following mathematical formula:

interest = (interest rate / number of payments) * loan principal

What is a floating rate of interest?

A floating rate of interest or adjustable interest that moves up and down and changes periodically with the market. If a borrower takes out a mortgage with a variable rate, it may start with a 4% rate and then adjust, either up or down, thus changing the monthly payments.

What if my floating rate of interest increases? Does that mean I will have to pay bigger amount of EMI?

With the increase in the floating rate of increase, the interest amount increase. Since the EMI you pay has a part of interest, it goes up with the increase in the floating rate of interest.

Can I get my EMI increased instead of getting my loan tenor increased?

Yes. You can increase your EMI instead of the loan tenor. For this, the financial institution you have borrowed from will check some of the documents like salary slips and identity card.