Home Loan EMI Calculator

If you are dreaming of your own house but thinking how to build one then home loan is the solution to your every problem. Home loans are common and many a people throughout the year apply for home loans from different banks and non-banking financial corporations as well. It is the amount that you borrow from the lender and build your own dream home, a fixed asset for you and your future generation. There is a fixed tenure within that period of time you need to repay the loan amount along with interest payment and other fees charged by the lender.

Home loans are bliss for the people who don’t have their own house. We not only value the money but we value the emotions. Availing home loans are not tough but paying EMI every month. Hence, calculating the interest payment and such are definitely tough job to do for a common man. Banks and NBFCs do help you with this but it is better to get clear idea on your own before you jump on any decision that can change your financial status for next 15 to 30 years.

EMI Calculation is important in case of not only Home Loan but in case of every loan you are availing. The EMI Calculation helps you to get the idea of how much money you are going to spend in a month for your house. Those who are into jobs have fixed salaries and they have to plan their financial decisions for a month accordingly. On the other who are in a business and don’t have fixed income are also needed to know how much fixed expenses they have to bear every month, so in every corner EMI Calculator for home loan is important.

EMI means Equated Monthly Instalment. This means equal amount of money one has to pay every month to the lender. EMI is a fixed amount that is being calculated based on the loan amount, rate of interest and time period of the loan. For the calculation of the EMI one needs to know about the variables that are needed to tell you how much you are required to pay off to your lender on each month.

The first thing is the loan amount. As for example say the loan amount is ₹5,000,000/- in total. One of the major parts of the EMI will be the loan amount.

The second important thing in calculation of EMI for the Home Loan is the rate of interest. There is a fixed rate of interest that is given by the lender. The EMI will be calculated according to the rate. Say in our example the rate is 9.5% per year. Another part of the EMI is the interest amount payable to the lender.

The third part of the EMI is the tenure of the loan repayment that is how much time you will get to repay the loan to the lender. For example we can consider 20 years in this case. So for next 20 years the applicant needs to pay EMI every month accordingly.

To calculate the EMI a simple formula is being applied. The formula is as follows:

EMI = P.i.(1+i)^n / {(1+i)^n – 1},

Where

• P = Home Loan Amount
• i = Rate of Interest
• n = Tenure of the loan payable

Following this formula one can easily calculate the EMI for the Home Loan he/she is availing. In our example the total payable loan amount in 20 years is ₹11,185,574/- in total. The breakage of the calculation is given below in the table.

Part repayment in Home Loans is a way to decrease your tenure during your loan. In part repayment you repay a large part of your loan amount beforehand and that reduces the loan amount hence the interest amount for the rest of the time. Part repayment does not affect your EMI. It does not lower the EMI amount what it reduces is the tenure of the loan repayment. Home loan is a long term loan so in any time during the loan period if you feel you are able to pay a large portion of your total payable amount then you can pay it. Consequently your principal amount will be reduced by a large portion and the next interest payments will be calculated on the basis of the reduced principal amount. That results in lower tenure time.

Is there an option to get excess fund, then it’s time to check if the home loan is actually life a sword in your life. If the monthly EMI amount is huge, then without any doubt pre-close the loan amount. However, on the other hand if the EMI is a very minimal amount, then it’s fine to retain the home loan to avail tax benefits and make use of the surplus fund for other investments. Also if you interest amount is more than ₹200,000 per annum, there will be no tax exemption, thus it’s wise to pre-close the home loan amount as early as possible. Another available option will be to pre-pay the loan to the extent such that the annual interest will be less than ₹200,000, this was your EMI amount will drop, the interest will be tax free and you will have sufficient surplus of fund for any other type of small investment. On the whole it is advisable to pre-close the loan as early as possible as there is lot of changes in a span of 10-15 years. In case of any emergency situations, it is good to not have huge EMI commitments. Thus consider job security, health issues and any such serious aspects before making any decision.

The whole process of pre-closure of home loan can be put into 7 simple steps. If the loan is pre-closed through these steps, the processing will be easy and fast.

1. Firstly make a list of all the documents that should be received back from the bank in order to complete the process.
2. Then obtain the no objection certificate, this is commonly known as NOC from the bank. This certificate is a clearance certificate from the bank stating you have cleared all the outstanding payments related to the home loan and there is no objection to transfer the ownership. Through this the bank confirms that it has no more interest on the property.
3. The third step is to remove lien on property from the registrar office, in case of no lien is created, then it’s not an issue at all.
4. Fourth step is to get the CIBIL score updated. The score will shoot up if the loan is repaid without any default.
5. Fifth step is to get a certificate for legal clearance from a lawyer.
6. Then make sure you have a copy of the detailed tracking of loan repayment. This can either be taken through online bank website or directly from the bank officials.
7. Finally get a new Encumbrance certificate from Registrar.