How a Home Loan EMI Calculator is Used Wisely?

An equated monthly installment (EMI) is an amount you need to pay to the lender each month. EMI payment is a vital part of your home loan and ensures the loan payback on time. It is not an easy task to determine the EMI amount that is why there are home loan EMI calculators for your help. Using the home loan EMI calculator, you can determine the EMI amount quickly and easily. See the article below and know how to use an EMI tool wisely to make payments affordable.

How EMI is Calculated?

You need the three most important parameters of your home loan to calculate the EMI which are the principal amount, interest rate on the loan, and the tenure. Each EMI amount varies according to the parameters you insert in the Home Loan EMI Calculator. Hence before you apply for a home loan, it is important to know about the three parameters. You can calculate your home loan EMI using a mathematical formula, EMI = P × r × (1 + r)n/((1 + r)n – 1).

But it could be easier for you to access the EMI amount using the home loan calculator as it generates the EMI amount in a few seconds. Check out the below example to know how the home loan EMI calculator helps in your repayment. 

Example: If you borrow INR 25 lakh from a housing finance company at an interest rate of 9.85% per annum. What could be the best EMI for it? Find it in the below table.

Tenure (Years) Loan Amount  (INR) EMI (INR)
5 25,00,000 51,896
7 25,00,000 40,223
10 25,00,000 31,669
15 25,00,000 25,357
20 25,00,000 22,493

So, this is how you can use the home loan EMI calculator tool and plan your repayment. Choose the tenure which helps you pay the loan easily without disturbing your monthly income and expenses.

What are the factors affecting the home loan EMI?

There are various factors affecting the EMI of your home loan. Because home loans are linked to Marginal Cost of Lending Rate (MCLR), which keeps changing. Change in the interest rate during the loan tenure can affect your loan either positively or negatively. Home loans are offered at fixed, floating, or hybrid interest rates. In the fixed home loan interest rate your EMI doesn’t change during the tenure, and the EMI remains constant which is easy for you to find using the home loan EMI calculator. In floating home loan interest rates, it changes throughout the tenure based on the lender lending rate which affects your EMI amount.

And the next is hybrid interest rate where the lender provides you a fixed interest for a specific period after which the interest rate will be floating. The loan payment starts at a fixed interest rate, and later as the tenure passes your interest rate changes to floating.

So, when you apply for a home loan take care of the interest rate which the lender will charge and calculate the EMI amount using the home loan EMI calculator.