Home Loan EMI Calculator
In today’s time where property rates are continuously surging, buying a house without an external source of income is almost impossible. Hence, a lot of prospective buyers are moving towards home loans as their rescue option.
While borrowing a home loan, it becomes utmost important for the borrower to estimate the amount of monthly installments that he/she would be paying towards the repayment of their home loan. To get the actual amount of EMI, you may use a home loan EMI calculator. Let’s first understand home loans in detail!
Understanding Home Loans
Here are a few points that you should know about home loans-
- You can borrow a home loan for buying a home, a flat or a plot for the purpose of construction of a house, renovation, extension or repairs of your existing house
- Before taking the loan, it is important to calculate the amount of loan that you actually need to take, the time period in which you can repay the loan and the rate of interest that you’d paying on the borrowed amount
- It is advised that you use a home loan eligibility calculator to find out whether or not you are actually eligible for borrowing the desired amount. Your eligibility on the home loan will depend on various factors such as your monthly income, monthly expenses, assets, liabilities, etc.
What is the use of a Home Loan EMI Calculator?
A home loan EMI calculator helps you calculate the amount of monthly installments that you’d be paying on your home loan.
The home loan EMI calculator makes use of the factors such as the actual loan amount, loan tenure and the applicable rate of interest on the borrowed amount to calculate your EMI amount.
A home loan EMI calculator actually works on the following formula-
EMI = [P x R x (1+R)^N]/[(1+R)^ (N-1)]
EMI stands for Equated Monthly Installment
P refers to the principal amount, or the actual amount borrowed
R refers to the rate of interest on the loan amount (to be calculated monthly)
N stands for the loan duration; meaning the time period in which the loan amount must be repaid (to be used in terms of months)
Let’s take an example to understand this better-
Suppose, you take a home loan of Rs. 10 lakh for 2 years at a rate of interest of 20% p.a.
Now, since the rate of interest and loan duration given above are in different units, we need to first convert these
Loan duration in months - 12*2 = 24 months
Monthly Rate of interest - 20/12 = 1.66% p.m.
Now, using the above formula-
EMI = [P x R x (1+R)^N]/[(1+R)^ (N-1)]
EMI = [10 x 1.66 x (1+1.66)^24]/[(1+1.66)^ (24-1)]
EMI = Rs. 50,896
An EMI calculator uses the above formula to calculate the EMI on home loan in seconds. When using an EMI calculator, you don’t need to go through such long calculations of converting different units of loan tenure or rate of interest into months. Neither do you need to use such a formula to do the calculations by yourself.
You simply need to enter the three basic details related to your home loan, and you will see your EMI amount within seconds!
Frequently Asked Questions
What can a home loan be used for?
A home loan can be borrowed for various purposes such as buying a home, a flat or a plot for the purpose of construction of a house, renovation, extension or repairs of your existing house.
How can I use a home loan EMI calculator?
You can easily use a home loan EMI calculator to calculate your monthly EMI on the borrowed amount. All you need to do is enter the principal amount, loan tenure and applicable rate of interest.
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