Equated Monthly Instalment or EMI is the major factor loan applicants consider while buying a house. It decides the monthly amount you must pay to the financial institutions to payoff the loan.
EMIs may hold a significant role in deciding your monthly budget. Thus, it is highly recommended to be clear about your monthly income, expenses, savings and the budget for your dream home.
Home Loan EMI calculator tools are readily available online to help users. They calculate EMI based on the principal amount, tenure and the interest liable.
The formula used by the Home Loan EMI calculator is as follows:
EMI = (P x R x (1 + R)^N)/((1 + R)^N – 1), where P represent the principal or loan amount, R refers to the rate of interest per month, and N represents the time duration in months for which loan is taken.
This formula will assist you in multiple ways. You can calculate the monthly EMI and variation based on the change in the rate of interest and time of the loan.
How does the calculator work?
To calculate monthly EMI assuming the required loan amount is INR 70 lakh. Take the interest rate as 8.3% per annum and a time duration of 18 years or 216 months. Keep the values in the calculator, and you’ll get a monthly payment of INR 62,524.
The interest payable on INR 70 lakh will be INR 65,05,179. Hence, the total payable amount in 18 years is INR 1,35,05,179.
Suppose the interest rate increases to 9% per annum; the EMI will be affected. Using the EMI calculator, you will get the monthly EMI amount of INR 65,551. The interest payable will be INR 71,59,046. Similarly, in the case of an interest rate of 10% per annum, the monthly EMI will increase. The new monthly expenditure will be INR 69,989, and the total interest amount will be INR 81,17,637.
Now, if you change the period for the loan, the EMI amount will change again. Taking the same principal amount and rate of interest at 9.5% per annum to calculate the new monthly EMI.
If the period is 15 years, the monthly EMI will be INR 73,096. If you want to increase the time period to decrease your load, let us use the calculator for that as well. For 20 years period, the EMI will reduce to INR 65,249. The payable interest as per the housing loan eligibility calculator for 15 years is INR 61,57,231, and for 20 years is INR 86,59,8.04
Factors affecting the rate of interest
So you must have seen the variation in the amount of interest affecting the money spent. It depends on multiple factors, such as:
- The amount of loan you need
- The time duration for which the loan is taken
- Rate of interest charged by the bank
- The person taking the loan, as there are concessions offered to women and senior citizens
- Your employment status, for example, interest rates again vary if you are self-employed or work at any organisation
Are you eligible for a home loan?
Eligibility criteria vary for salaried and self-employed people.
You must be between 18 to 60 years old, earn a minimum monthly income of INR 20,000/month if you reside in Bangalore, Chennai, Delhi, Mumbai and Pune and hold Bachelor’s degree. The required minimum monthly income reduces to INR 15,000 for residents of other cities.
The age group should be 18 to 65 years, and the residents of Bangalore, Chennai, Delhi, Mumbai and Pune should earn at least INR 2,40,000 per annum. Residents of other cities should earn at least INR 1,80,000 per annum.
Guide for online application
- Go to the website of the preferred bank
- Provide the required documents (discussed later)
- Have the home loan approved
- Receive confirmation letter
Documents required for the application process
The documents required are Identity proof, age proof (Voter ID, Passport, PAN card, Driving license, Aadhaar card), income proof, address proof (Voter ID, Aadhar card, Driving license, passport), proof of educational qualification, banking information, and relationship proof.