Home loan is a long-term financial liability and one needs to be aware of the terms and conditions of the lending institution, other charges and rates of interest for availing the funds. Your monthly instalment amount is the key indicator of whether you can handle the home loan for the entire tenor. Hence, before you apply for a home loan, you should know the payable EMIs for comfortable loan repayments. This can be easily done with the help of housing loan EMI calculators.
What Is Home Loan EMI?
EMI stands for Equated Monthly Instalment that is repaid towards a home loan. It is the amount payable each month to the bank or financial institution until the home loan is fully paid off. EMI includes the loan interest and a part of the principal amount.
The interest component forms a larger portion of EMI repayments during the initial period of the home loan. It gradually reduces as the principal component increases with successive EMI payments. However, while the EMI amount remains unchanged; the proportion of the principal and interest amounts vary with each monthly repayment.
Types of EMI
There are mainly two types of EMIs, such as:
Flat Rate EMI
Flat rate EMI is calculated on the actual loan principal by adding the interest for the entire loan period. The sum of the loan principal and interest amount is divided by the number of months to arrive at the applicable EMI.
Monthly Reducing EMI
Monthly reducing EMI rates differ from flat rate EMI. These instalments are calculated on the principal balance amount outstanding each month.
How to Use a Housing Loan EMI Calculator
EMI calculators make use of the mathematical formula as given below:
EMI = [P x R x (1 + R) ^ N] / [(1 + R) ^ N – 1]
Here, P is the home loan principal
R is the rate of interest
N is the loan tenor
But these calculations involve complex numbers and may be prone to mistakes. Home loan EMI calculator simplify these calculations by computing error-free results in an instant. Thus, home loan applicants can conveniently work out their monthly instalments with the help of the following information:
- Principal loan amount that the borrower wants to avail
- Rate of interest offered by the lender
- Down payment, if any, else one can keep it as nil
- Loan tenor in months or years
Calculate Your Home Loan EMI Online
A home loan EMI calculator is user-friendly and requires basic details. Depending on the type of calculator provided by the lender, users can access this online financial tool, either by adjusting the sliders to make their selection or by typing in the respective fields. It is very simple to use and can be used to crunch complicated numbers in a few easy steps as mentioned below:
Step 1: Enter the loan principal amount that you wish to borrow
Step 2: Fill in the rate of interest at which you may avail the loan
(Some calculators may also require you to mention the down payment amount)
Step 3: Provide the preferred loan tenor
Step 4: Click on the ‘Calculate’ option.
The calculator will display a break-up of the loan EMI and illustrate the principal and interest paid each month separately in a table known as the amortization table.
Home Loan Amortization Schedule
Loan amortization is the process of reducing the debt with regular payments over the loan period. A home loan amortization schedule is a table comprising EMI payments to be paid over the duration of one’s loan tenor. It indicates the interest and principal break-up of each instalment from the beginning of the tenor till its end. This break-up also helps you to understand the home loan tax benefits that you can derive on both the principal and interest components of your home loan.
In the amortization table, the EMI remains constant; while the interest component decreases and the principal component increases with progression in loan tenor. Apart from the opening and closing balance, one can also view the interest and principal paid yearly and in total.
An EMI chart displays information like the home loan amount, rate of interest, loan tenor, monthly EMI amount and the total number of EMIs providing a realistic overview of the home loan. The EMI schedule or amortization table shows the following details:
- Monthly repayments for the whole duration
- Principal amount for that month
- Interest paid for that month
- Total interest paid till that month
- Balance amount
Given below is the yearly amortization schedule for a home loan of Rs. 50 lakh availed for a tenor of 10 years at 9.00% p.a. interest rate, wherein the borrower’s EMI outgo is Rs. 63,338.
| Year | Principal (Rs.) | Interest | Balance | Paid (%) |
| 2022 | 1,31,142 | 1,85,548 | 48,68,858 | 2.62 |
| 2023 | 3,35,472 | 4,24,583 | 45,33,387 | 9.33 |
| 2024 | 3,66,941 | 3,93,113 | 41,66,445 | 16.67 |
| 2025 | 4,01,363 | 3,58,692 | 37,65,083 | 24.70 |
| 2026 | 4,39,013 | 3,21,041 | 33,26,069 | 33.48 |
| 2027 | 4,80,196 | 2,79,859 | 28,45,873 | 43.08 |
| 2028 | 5,25,242 | 2,34,813 | 23,20,632 | 53.59 |
| 2029 | 5,74,513 | 1,85,542 | 17,46,119 | 65.08 |
| 2030 | 6,28,406 | 1,31,649 | 11,17,713 | 77.65 |
| 2031 | 6,87,355 | 72,700 | 4,30,358 | 91.39 |
| 2032 | 4,30,358 | 13,007 | 0 | 100.00 |
Advantages of Using a Home Loan EMI Calculator
A home loan EMI calculator offers several handy benefits to its users. It is very easy to use and provides accurate calculations in an instant. It enables borrowers to know their payable monthly instalments before they even apply for a home loan. This, in turn, helps them to make informed decisions regarding the following:
- How much money they can borrow on the home loan
- Whether they should opt for a long-term or short-term home loan
- The ideal amount they can contribute for the down payment
- Plan their finances effectively to ensure timely loan repayments
Summing Up
Housing loan EMI calculators provide a clear picture of the EMI outgo, which allows home loan borrowers to estimate their debt burden and handle it accordingly. Its numerous advantages enable you to assess home loan eligibility and plan your home purchase journey in an organised manner. Also, if you find the current home loan interest rates to be favourable, one can easily use the online calculator to plan for a home loan balance transfer or a top-up loan to facilitate better credit management.