What is a Home Loan EMI Calculator ?
After starting out on your plan to buy a house, you may have realized something – it can be much more complicated than you anticipated.
A Home Loan monthly EMI Calculator is a powerful financial tool designed to simplify the complex process of estimating monthly loan repayments for home buyers.
The borrower makes the repayment of the loan each month in the form of home loan EMI. EMI stands for Equated Monthly Installment; it includes the principal amount and the interest payable, divided through the tenure chosen. Using this simple online EMI calculator, borrowers can instantly receive an estimate of their monthly EMIs by inputting basic details like loan amount, interest rate, and tenure.
Whether you're a first-time homebuyer or refinancing, this calculator provides a straightforward way to understand and plan for your home loan repayments. With the right EMI amount in mind, you can confidently take steps towards owning your dream home without the worry of financial uncertainty.
How to Calculate Home Loan EMI?
For most borrowers, a home loan is a significant, long-term commitment, sometimes lasting up to 20-30 years. Even minor fluctuations in interest rates can have profound effects on affordability, overall repayment duration, and total interest paid. Hence, it's crucial to find the right balance between loan amount, EMI affordability, and tenure alignment with life goals.
This calculation – that is essentially your life plan – can seem quite daunting to go about doing manually. This is where online home loan EMI calculator can help you.
You simply input the numbers in the fields provided and let the home loan EMI calculator online do the rest.
This is the home loan EMI calculator formula used:
EMI = [P x r x (1+r)n] / [(1+r)n - 1]
Where:
P = Principal loan amount
n = Loan tenure in months
r = Monthly interest rate. The monthly interest rate (r) is calculated as the annual rate of interest divided by 12 and then by 100.
For example, with a loan amount of Rs. 25,00,000, an annual interest rate of 6.70%, and a tenure of 20 years, the EMI would be Rs. 18,935.
How to use SBI Realty's Home Loan EMI Calculator?
You can either enter the amount in figures or you can simply drag across the slider bar to choose preferred amount from the slider bar. Both are acceptable.
Here are the steps to use the calculator:
- Enter the amount of loan required by you.
- Enter the desired tenure of the loan.
- Enter the rate of interest. Check the ongoing rates in the market to keep to close to reality.
With this information, the calculator will show you the -
- Monthly EMI payable
- Total amount payable by you over the tenure of the loan
- The bifurcation between principal amount and interest amount.
Here is what the data you see means,
For example, if you select Rs. 25 lakh loan amount, for 20 year tenure at an interest rate of 6.70%, your monthly EMI comes to Rs. 18,935.
According to the formula, over the tenure of the loan the total amount you will pay back to the bank will be Rs. 45,44,365. This amount includes principal of Rs. 25 lakh and Rs. 20,44,365 as interest on the loan.
Just below the calculator, you can also see the entire journey covered in a graph, complete with year-wise balance amount payable and the bifurcation between principal amount & interest amount for each year.
What are the benefits of using an EMI Calculator for a home loan?
- Accuracy: Eliminates manual errors in calculations, ensuring precise results.
- Ease of Use: Simple process - input loan details and get results without complex math.
- Aids in Financial Planning: Getting to know the EMI beforehand helps in planning your budget smoothly, ensuring it aligns with your financial goals without causing strain on other necessary expenses.
- Comparison: You can use the home loan calculator to compare loan offers from various banks. This calculator allows you to try out different combinations of loan amount & tenure to find an affordable EMI. The results will show you the total cost of each loan along with their respective EMIs. This will help you narrow down the most feasible option, aiding in budgeting and managing finances effectively
- Tenure Selection: Helps in choosing the right loan tenure - shorter for faster repayment or longer for lower EMIs.
- Breakup of Costs: Provides a clear breakdown of finance charges (interest, processing fee), helping understand the true cost of the loan.
- Validation: When you're negotiating that housing loan deal, use the calculator to double-check the bank's repayment plan. This validates repayment schedules provided by banks during negotiations, ensuring transparency.
When do my home loan EMIs start?
EMIs begin from the month subsequent to the month in which disbursement of the loan is done.
What is a pre-EMI on a home loan?
Pre-EMI refers to monthly payments that solely cover the interest portion of your home loan, without any repayment towards the principal amount. This option is available while your home or apartment is being constructed. Pre-EMI payments are lower since they exclude the principal component of the home loan. Once construction is finished, your lender will require you to start paying the full EMI, which includes both interest and principal.
Remember, a pre-EMI is not considered a part of the home loan tenor. It is designed to reduce the burden on you during the time that
your asset is under development.
Is the EMI fixed throughout the loan tenure?
For fixed-rate loans, the EMI remains constant. However, for floating rate loans, EMIs can change with fluctuations in interest rates.
Can I make part payments towards my home loan?
Yes, most lenders allow part prepayments which can help in reducing the total interest burden.
What are the tax benefits of paying home loan EMIs?
There are several tax benefits and concessions attached to paying home loan EMIs, such as:
- Section 80C: You can claim a tax rebate on the principal component of your home loan EMI, up to Rs. 1.5 lakh every year
- Section 24(b): You can claim a tax rebate on the interest component of your home loan EMI, up to Rs. 2 lakh every year
- Section 80EE: You can claim a tax rebate on the interest component of your home loan, after you have exhausted the claimed cap under Section 24(b), up to Rs. 50,000, only if you are a first-time home buyer
New Tax Regime
There were slight changes made to the home loan tax benefits under the new tax regime, which were announced during the Union Budget 2023 by Finance Minister Nirmala Sitharaman.
The majority of other deductions, including those for home loans, house rent allowance (HRA), etc., are not available in the new tax regime, despite the introduction of a standard deduction of Rs. 52,500.
The most significant pronouncements concern raising the tax slabs under the new system. For instance, the exemption threshold has increased from Rs.2.5 lakh to Rs.3 lakh under the new system. Also, the income threshold with a 10% tax has been raised from Rs.5 lakh to Rs 7.5 lakh and Rs. 6 lakh to Rs. 9 lakh.
What happens if I miss an EMI payment?
Missing an EMI can negatively impact your credit score and also lead to penalties. It's essential to ensure timely payments or inform the lender in case of difficulties.
How To Reduce EMI Amount on A Home Loan?
Once the home EMI calculator shows you your EMI amount you will have a clearer picture of your home loan repayment break-up. To reduce your EMI amount on a home loan follow these tips:
- Choose a higher down payment- A higher down payment gives you a lesser principal amount on which the EMI is calculated. If the principal amount is low the EMI will also be lower.
- Choose a long repayment tenure – A longer repayment tenure gives you more time to repay your loan and hence the EMI is also reduced.
- Take a balance transfer loan - These loans are typically offered at lower rates of interest.