Buying a home is one of the pivotal decisions which one takes for a lifetime both financially and personally. Keeping in view, the loan’s long tenure and high loan principal amount require a planned approach while choosing home loans. The home loan EMI Calculator has been designed as per the user-friendly requirements of the borrower availing home loans. It assists the borrowers to calculate their home loan EMIs spontaneously. However, home loans are sanctioned subject to the property cost and the borrower’s repayment capability.
There are long tenure home loans as well whose repayment period stands upto 30 years. Depending on the personal requirements and eligibility criteria of the borrower -loan amount, tenure and interest rate are important constituents to be taken into consideration while calculating home loan EMI.
Home Loan Eligibility Calculator
Home Loan Eligibility Calculator permits the borrower to understand about the various combinations that can be employed for repayment of home loans. However, an analysis can also be undertaken which will accommodate the borrower’s requirements as per their own repayment capability. The borrower has to enter the below details for determining his/her eligibility:
- Net monthly income
- Existing EMI
- Rate of Interest
- Loan Tenure
According to the general perspectives, higher the capacity of the borrower for repaying the loan, higher would be the amount that would determine the borrower’s eligibility. However, the home loan amount will be higher for larger tenures and have lower interest rates.
EMI Calculator for Home Loan
Home loan EMI Calculator is an arithmetical tool which is useful for calculating the EMIs payable towards a home loan. For calculating the monthly installments, the total interest outgo and the total amount(principal+total interest), a borrower has to input these details in the EMI Calculator:
- Loan Amount (in ₹ Lakh)
- Number of Months
- Interest Rate (in %)
The final value will be the EMI which is subject to be paid towards home loan.
Home Loan EMI Calculator Formula
To calculate EMI, the following formula is applied by the EMI Calculator:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
EMI= Equated Monthly Installment
P= Principal Loan Amount
R= Monthly Interest Rate
N= Number of Monthly Installments
For example : In order to calculate EMI for a principal value of ₹ 20 lakh, 8.35%-13.95% p.a. interest rate and 30 years tenure; following will be the calculations:
Principal amount : ₹ 20,00,000
Rate of Interest : 8.35%-13.95% p.a.
Tenure : 30 years
Calculated EMI : ₹ 15,166-₹ 23,618
Total Interest Amount : ₹34,59,819- ₹ 65,02,590
Total Amount(Principal+Interest): ₹ 54,59,819- ₹85,02,590
After observing the above example, it is noted that there are three underlying parameters behind EMI payments: principal amount, interest rate, and tenure. The EMI payments are directly proportional to the loan amount and the interest rates which are inversely proportionate to the duration of the home loan. The higher the loan value or interest rate, the higher will be the EMI payments and vice versa. In the case of the tenure of the loan, the total interest amount payable increases with the increase in tenure, the EMI payment diminishes with an increasing duration.
How does a Home Loan Calculator works?
EMI Calculator works as per the following parameters:
Loan Amount : The amount borrowed for buying a house is known as the loan amount. The amount borrowed is based upon the property cost and the repayment capability of the borrower. However, a lender is entitled to 80% of the property cost as the loan. This is known as the principal amount of the loan and the rate of interest applicable on it. The final value arrived after applying interest rate gets allocated throughout the loan duration. Enter an EMI amount which does not exceed 40% of the monthly income of the borrower.
Interest Rate: The rate applicable on the lending amount is known as the interest rate. The rates of home loan vary from one lender to another, so it is best to prefer the interest rates before applying for home loans. There are two types of interest rates applicable on home loans- fixed or floating rate. In case of fixed interest rate, the rate of interest remains unchanged throughout the loan duration and so will be the EMIs. However, in case of floating interest rate, the rates differ with respect to the changes in base rate and subsequently, EMIs will tend to vary.
Tenure: It is the time interval determined in advance as a repayment towards home loan. Some of the loans are also availed with flexible loan duration. The repayment period of long-term home loans comprises of upto 20 years, in some cases even lasts until 30 years. The borrower needs to ascertain the tenure as per own choice but needs to acknowledge longer the tenure, more will be the interest.
Home Loan EMI Calculator Excel
Home loan borrowers can easily calculate their home loan EMIs on MS Excel. They are required to utilize the function PMT for calculating the EMIs.
They are required to follow the below syntax in order to use the formula in EMI Calculator in MS Excel.
Syntax : PMT (rate, nper, pv)
The variables used in the above formula are :
rate – Rate of Interest on the loan
nper– Total number of payments for the home loan
pv– Present value/principal