Home Loan Interest Calculator
Use the home loan interest calculator to understand your interest liability and EMI amount for your home loan. Use this calculator to help plan your monthly finances to make the right decision in your home purchase.
What are the benefits of using an interest rate calculator?
There are several benefits of using an interest rate calculator online. Here are a few of them.
- It allows you to simulate different options of principal, interest rate and tenure and seek the best EMI that suits you.
- It is a good basis for comparing different offers from competing banks and finally arriving at the best offer.
- Interest calculator is very simple and you can use it at home and spend time trying out various options. You don’t have to go through manual calculations.
- The calculator condenses extensive excel calculations into a simple and user friendly front-end which is easy to use and compare
- You can prepare a set of funding options and combinations before you actually meet your banker, so you are fully prepared.
In short, the calculator makes life a lot simpler; giving borrowing impact output in one small page.
How to use a home loan interest rate calculator
The home loan calculator can be best be used as a simulator. You are looking at different options to fund your home in terms of combinations of tenure, rates, loan amount etc.
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.
For example:
| Option A |
Option B |
Option C |
| Loan Amt – Rs40 lakhs |
Loan Amount – Rs45 lakhs |
Loan Amount – Rs50 lakhs |
| Tenure – 10 years |
Tenure – 15 years |
Tenure – 15 years |
| Interest rate – 6.8% |
Interest rate – 7.2% |
Interest rate – 7.2% |
| Monthly EMI – Rs. 46,032 |
Monthly EMI – Rs. 40,952 |
Monthly EMI – Rs. 45,502 |
| Interest to Principal – 0.38X |
Interest to Principal – 0.64X |
Interest to Principal – 0.64X |
What is the meaning of the home loan amortization schedule?
Loan amortization is the full tenure schedule by which you loan goes down to zero as you keep paying the EMI each month. In other words, the amortization schedule is the process of reducing the debt with regular payments over the loan period through equated monthly instalments. Such EMIs have an interest component and a principal component.
The interest and EMI calculator offers the amortization schedule as an added feature to simplify the analysis for the customer. This gives a fair understanding about the ratio of the principal amount to the interest due, depending on the loan tenure and the extant interest rates.
The amortization also tells you at any point of time, how much is your principal outstanding so that if you have the cash available, you can use the funds to either partially or fully prepay the loan and save on the monthly EMI outgo.
The amortization breaks up the EMI into interest and principal over the full tenure, so you know at what point it is profitable to foreclose the loan.
What is the maximum home loan that I can get on EMI?
The maximum home loan is a function of two factors. Firstly, it is a factor of the value of the property and secondly it is a factor of your affordability. Let us look at the cost of property factor first. Any bank funding your home will insist that you bring in 15% to 25% of your home cost as personal equity. Only the balance amount is funded by the bank. Under RBI regulations, banks cannot fund 100% of the home cost.
The other issue is affordability. The bank will be more keen to give you a loan if they are sure you can service the EMI over the loan tenure. For instance, if your income flows are not stable or if your credit score is too low, then your loan eligibility also reduces in proportion. Hence both factors play a role in the home loan amount eligible.
What does EMI actually mean?
EMI is an abbreviation for Equated Monthly Instalment. This is the amount that the banks debits to your account each month. This will be the standard amount to be paid till the end of the tenure. Of course, in the case of variable rate loans, the EMI could change.
The EMI comprises of the principal and interest components and the structuring is such that in the initial years of your loan, the interest component is much larger than the principal component, while during the latter half of the loan, the principal component is much larger.
You can either make the payment by post-dated cheques or you can also get into a NACH agreement with the bank for regular debits to the bank account for the said amount. The EMI typically falls due on a specific date each month and on that date the amount is debited so you know in advance when to keep the bank account appropriately funded.
When do I have to start paying the interest on my loan?
Normally, banks will insist that the payment of EMIs start from the month subsequent to the month when the loan is fully disbursed. However, there is an exception when it is an under construction property. In such cases, EMI usually begins after the complete home loan is disbursed and possession given. However, during the pre-EMI period interest is payable and that will be in addition to the full EMIs that will start on the full possession of the home. Even in the case of partial disbursement , the interest liability starts ticking from the first disbursement itself on a proportionate basis. In the case of resale properties, the full loan amount is disbursed in one go, hence the EMI on total loan amount start from month after the month of disbursement.