Calculating your home loan EMI gives you a clear picture of your monthly repayments, helping you plan your finances with confidence. It ensures you understand your affordability, interest costs, and total loan commitment. With the right estimate, you can make smarter borrowing decisions and stay financially prepared.
How to Calculate Home Loan EMI
Home loan EMI can be calculated manually using formulas or instantly with online EMI calculators, ensuring accurate results for better financial planning and informed decisions.
Calculating Home Loan EMI Using Credit Dharma’s Home Loan EMI Calculator
Credit Dharma’s Home Loan EMI Calculator offers a quick, hassle-free way to estimate your monthly payments—just enter the loan amount, interest rate, and tenure for instant results.
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Free ConsultationCalculating Home Loan EMI Manually Using a Formula
Manually calculating home loan EMI helps you understand the math behind your payments using a formula based on principal, interest rate, and tenure.
- Identify Loan Details – Note the principal amount (P), annual interest rate, and loan tenure in years.
- Convert Interest Rate – Divide the annual interest rate by 12 to get the monthly rate (R).
- Convert Tenure – Multiply the loan tenure by 12 to get the total months (N).
- Apply the EMI Formula – EMI = P × R × (1+R)^N / ((1+R)^N) – 1
- Calculate EMI – Plug in the values to get your fixed monthly installment.
Calculating Home Loan EMI Using Excel
Using Excel to calculate home loan EMI is a quick and accurate method, eliminating manual errors. With a simple built-in function, you can instantly determine your EMI based on loan details.
- Open Excel – Start a new spreadsheet.
- Enter Loan Details – Input Loan Amount (P), Annual Interest Rate, and Loan Tenure (Years) in separate cells.
- Calculate Monthly Interest Rate & Tenure – Use formulas:
– R (Monthly Rate) = (Annual Rate/12)/100
– N (Total Months) = Tenure * 12 - Apply PMT Function – Use:
– =PMT(R, N, -P) - Get EMI – The result shows your monthly EMI instantly.
Also Read: How to Calculate Prepayment Amount for Home Loans?
What is Home Loan EMI?
EMI, or Equated Monthly Installment, is a fixed monthly payment covering both the principal repayment and interest on the outstanding loan amount. Opting for a longer tenure, up to 30 years, can help lower the monthly burden, making repayment more manageable. It ensures a structured approach to loan repayment while balancing affordability and financial stability.
How Does Calculating Home Loan EMI Help in Planning a Home Purchase?
Calculating home loan EMI provides clarity on monthly repayments, helping in informed financial decisions. It helps estimate the loan amount you can afford, assess your contribution towards the property, and determine overall costs. Knowing your EMI ensures better loan eligibility evaluation and a well-planned home-buying journey.
How Do I Calculate Home Loan EMI If I Borrow ₹50 lakh for 20 Years @8.50% p.a.?
When borrowing a home loan of ₹50 lakh for 20 years at an 8.50% annual interest rate, calculating EMI helps in understanding your monthly repayment obligation. This ensures better financial planning and helps assess affordability before committing to the loan. Here’s how you can calculate it:
- Loan Details –
Loan Amount (P) = ₹50,00,000
Annual Interest Rate = 8.50%
Loan Tenure (N) = 20 years - Convert Interest Rate & Tenure –
– Monthly Interest Rate (R) = 8.50% ÷ 12 ÷ 100 = 0.00708
– Loan Tenure in Months (N) = 20 × 12 = 240 - Apply EMI Formula –
EMI = P × R × (1+R)^N / ((1+R)^N – 1)
Substituting values: EMI = 50,00,000 × 0.00708 × (1.00708)^240 / ((1.00708)^240 – 1) - Calculate EMI –
– The EMI for this loan will be approximately ₹43,391 per month.
Also Read: Home Loan Options for ₹30 LPA Salary
What are the Benefits of Calculating Home Loan EMI?
Calculating your home loan EMI (Equated Monthly Installment) is essential for effective financial planning when considering a home loan.
- Financial Planning: Knowing your EMI helps you in making a budget effectively and assessing loan affordability.
- Loan Comparison: It enables you to compare different loan offers based on EMIs, interest rates, and tenures. ​
- Informed Decision-Making: Understanding your EMI ensures the loan aligns with your financial capabilities, aiding in informed home-buying decisions.
- Time-Saving and Accuracy: Using an EMI calculator provides quick and precise results, eliminating manual calculation errors. ​
- Prepayment Planning: It assists in strategizing loan prepayments, helping you save on interest and reduce loan tenure.
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What is a Home Loan Amortization Schedule?
A home loan amortization schedule is a detailed table that breaks down each EMI payment throughout the loan tenure. It provides a clear view of how the loan is repaid over time, showing:
- Outstanding loan balance before each EMI payment.
- EMI amount payable every month.
- Principal repayment contribution in each EMI.
- Interest component deducted from each payment.
- Remaining loan balance after each EMI.
For example, if you take a ₹10 lakh loan at 8.5% interest for 10 years, your EMI would be around ₹12,400. Here’s how the first few months would look:
| Month | EMI (₹) | Interest (₹) | Principal (₹) | Remaining Balance (₹) |
|---|---|---|---|---|
| 1 | 12,400 | 7,083 | 5,317 | 9,94,683 |
| 2 | 12,400 | 7,040 | 5,360 | 9,89,323 |
| 3 | 12,400 | 6,997 | 5,403 | 9,83,920 |
Read More: Home Loan Amortization: Basics and Applications
How Does the Interest Rate Affect My Home Loan EMI?
​The interest rate on your home loan significantly influences your Equated Monthly Installment (EMI), determining both your monthly payment and the total interest paid over the loan’s tenure.
Impact of Interest Rate on EMI:
- Direct Relationship: A higher interest rate increases your EMI, while a lower rate decreases it.
- Total Interest Paid: Elevated interest rates lead to higher overall interest expenses throughout the loan period.
- Loan Affordability: Higher EMIs may strain your monthly budget, affecting your ability to manage other financial commitments.
Example:
Let’s consider a ₹50 lakh home loan with a 20-year tenure and compare how EMI changes with different interest rates, Where:
P = ₹50 lakh
n = 20 years = 240 months
r = Monthly interest rate
| Interest Rate | Monthly Interest Rate (r) = (Annual Interest Rate ÷ 12 ÷ 100) | EMI Calculation = P × r × (1 + r)^n / ((1 + r)^n – 1) | Final EMI (₹) |
|---|---|---|---|
| 8.5% p.a. | 0.00708 | ₹50L × 0.00708 × (1+0.00708)^240 ÷ ((1+0.00708)^240 -1) | ₹43,391 |
| 9.0% p.a. | 0.0075 | ₹50L × 0.0075 × (1+0.0075)^240 ÷ ((1+0.0075)^240 -1) | ₹44,986 |
Impact of Interest Rate on EMI:
- Higher interest rate = Higher EMI: A 0.5% increase in the interest rate (from 8.5% to 9.0%) leads to an EMI increase of ₹1,595 per month, adding ₹3.8 lakh extra in 20 years.
- Lower interest rate = Lower total repayment: Choosing a lower interest rate helps reduce both EMI and total loan costs over time.
How to Reduce Your Home Loan EMIs?
Here are three simple ways to lower your monthly home loan payments:
1. Choose a Longer Tenure
- What to Do: Extend the time you take to repay the loan.
- Why It Helps: Spreading the loan over more years decreases your monthly EMI.
| Pros | Cons |
|---|---|
| Lower monthly payments | You pay more interest overall |
| More money for other expenses |
2. Make Prepayments
- What to Do: Pay extra money towards your loan when you have extra funds.
- Why It Helps: Reduces the principal amount, which lowers the interest and EMI.
| Pros | Cons |
|---|---|
| Lowers the loan principal | May have fees for fixed-rate loans |
| Can shorten the loan period or reduce EMI | Not ideal if your loan has a low interest rate |
3. Transfer Your Loan to a Lower Interest Lender
- What to Do: Move your loan from one bank to another that offers a lower interest rate.
- Why It Helps: A lower interest rate reduces your EMI.
| Pros | Cons |
|---|---|
| Lower monthly payments | May have transfer fees and other costs |
| Better loan terms | Could extend the loan tenure if not careful |
Also Read: How to Reduce Home Loan Interest
How Much Will EMI Be for ₹10 Lakhs Home Loan?
Calculating the Equated Monthly Installment (EMI) for a ₹10 lakh home loan is crucial for effective financial planning. The EMI depends on the loan amount, interest rate, and tenure. Here’s a breakdown of the EMI for a ₹10 lakh loan across different tenures and interest rates:​
| Loan Tenure | Interest Rate | Monthly EMI | Total Interest Payable | Total Amount Payable |
|---|---|---|---|---|
| 10 years | 8.75% | ₹12,533 | ₹5,03,921 | ₹15,03,921 |
| 20 years | 8.75% | ₹8,837 | ₹11,20,906 | ₹21,20,906 |
| 25 years | 8.75% | ₹8,221 | ₹15,66,494 | ₹25,66,494 |
Top Banks Interest Rates
| Bank | Up to Rs. 30 Lakh | Above Rs. 30 Lakh to Rs. 75 Lakh | Above Rs. 75 Lakh |
|---|---|---|---|
| SBI Bank | 8.50% p.a. onwards | 8.5% p.a. onwards | 8.50% p.a. onwards |
| HDFC Bank | 8.75% p.a. onwards | 8.75% p.a. onwards | 8.75% p.a. onwards |
| LIC Bank | 8.50% – 10.35% p.a. | 8.50% – 10.55% p.a. | 8.50% – 10.75% p.a. |
| ICICI Bank | 8.75% p.a. onwards | 8.75% p.a. onwards | 8.75% p.a. onwards |
| Kotak Mahindra Bank | 8.75% p.a. onwards | 8.75% p.a. onwards | 8.75% p.a. onwards |
| Punjab National Bank | 8.50% – 11.05% p.a. | 8.50% – 11.05% p.a. | 8.50% – 11.05% p.a. |
| Bank Of Baroda | 8.15% onwards | 8.15% – 10.65% p.a. | 8.40% – 10.90% p.a. |
| Bajaj Housing Finance | 8.50% p.a. onwards | 8.50% p.a. onwards | 8.50% p.a. onwards |
| Axis Bank | 8.75%-10.30% p.a. | 8.75%-10.30% p.a. | 8.75%-10.30% p.a. |
| Bank of India | 8.40% p.a onwards | 8.40% p.a onwards | 8.40% p.a onwards |
| TATA Capital | 8.75% p.a. onwards | 8.75% p.a. onwards | 8.75% p.a. onwards |
Home Loan Processing Fees by Top Banks
| Bank | Home Loan Processing Fee |
|---|---|
| SBI (State Bank of India) | 0.35% of the loan amount (min ₹2,000, max ₹10,000) + GST |
| HDFC Bank | Upto 0.50% of the loan amount or Rs. 3300/- whichever is higher |
| ICICI Bank | 0.50% of the loan amount (min ₹3,000, max ₹5,000) + GST |
| Axis Bank | 1% of the loan amount or ₹10,000 (whichever is lower) |
| Kotak Mahindra Bank | 0.5% – 1.00% of the loan amount |
| Bajaj Housing Finance | Up to 4% of the loan amount |
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- Lowest Interest Rates: Save more with every EMI.
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Conclusion
Calculating your home loan EMI is essential for making informed financial decisions and ensuring a manageable repayment plan. Understanding how factors like loan amount, interest rate, and tenure affect your EMI helps you choose the best loan option for your needs.
Choosing Credit Dharma for your home loan simplifies this process. From home loan EMI calculations to timely updates on your loan application progress, our expert guidance ensures a smooth home loan journey.
Frequently Asked Questions
To calculate home loan EMI, use the formula:
EMI = [P × R × (1+R)^N] / [(1+R)^N – 1]
Where P = Loan amount, R = Monthly interest rate (annual rate/12/100), and N = Loan tenure in months. This helps determine fixed monthly repayments.
Utilizing an online EMI calculator is beneficial as it offers precise estimations of your monthly payments swiftly, thereby saving you valuable time in financial planning.
The EMI for a ₹20 lakh home loan over 15 years depends on the interest rate. At an 8.5% annual interest rate, the estimated EMI would be ₹19,695. Use an EMI calculator to get precise values based on your lender’s rate.
Each EMI consists of principal and interest components. Initially, a larger portion goes towards interest, while the principal repayment is smaller. Over time, the interest reduces, and a larger share goes toward the principal, gradually decreasing the outstanding loan balance.
The EMI for a ₹7 lakh home loan over 10 years depends on the interest rate. At 8.5% p.a., the EMI is approximately ₹8,650. Use an EMI calculator to get an exact amount based on your interest rate and tenure.
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