EMI Schedule
| Year | Opening Balance | Interest | Principal | Closing Balance |
|---|---|---|---|---|
| 2023 | ₹ 2,00,00,000 | ₹ 5,65,462 | ₹ 30,89,317 | ₹ 1,69,10,683 |
| 2024 | ₹ 1,69,10,683 | ₹ 11,22,561 | ₹ 98,41,774 | ₹ 70,68,909 |
| 2025 | ₹ 70,68,909 | ₹ 2,40,657 | ₹ 70,68,902 | ₹0.00 |
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Formula to Calculate Home Loan EMI
In case you are interested to know the formula that all house loan calculators use, here it is -
E = P x R x (1+R)^N
————————
[(1+R)^N-1]
P - the principal amount that is borrowed
R - the rate of interest imposed
N - tenure in the number of months
Here is an example -
Let Rs.10,00,000 be the amount borrowed (P), the annual rate of interest (R) be 8% , and 3 years or 36 months be the tenure (N)
Then the EMI to be paid using the above formula will be:
E = [10,00,000 x 0.00666 x (1+0.00666)^36] / [(1+0.00666)^36-1] = Rs. 31,336
Therefore, the EMI for a Rs.10 Lakh home loan would be Rs.31,336.
The rate of interest (R) is calculated monthly i.e. it is calculated as (Annual Rate of interest/12/100). In this case, it is 8/12/100 = 0.00666.
The above formula can be used to calculate EMIs for all types of loans and not just home loans, unless mentioned otherwise.
Factors that Affect Home Loan EMI
You must be searching for ‘home loan calculator India’ to understand how much your monthly installments will be. But there are multiple factors that impact your interest rate and thus, also affect your EMI amount.
Take a look at some such factors-
Your credit score is a numerical representation of your creditworthiness. The higher the score, the better are your chances of availing of a loan. A higher credit score may also help you to negotiate a lower interest rate or a longer loan tenure.
Thus, if you are planning to take a housing loan in the future, it is advisable to start working on improving your credit score.
Houses that are in newer or upcoming areas are considered to be more valuable. Loans for such homes can generally be availed at a lower interest rate.
The Marginal Cost of Funds based Lending Rate is the minimum that a bank or financial institution can lend at.
This is decided annually and depends on various factors such as operating cost, the marginal cost of funds, etc. The interest rate imposed will increase or decrease based on variations in the MCLR rate.
This is essentially the percentage of the property value that the loan can finance. The higher the loan amount availed, the higher is the rate of interest. This is because the risk of the lender increases with higher loan amounts.
Salaried employees or those with a steady stream of income can generally avail loans at a relatively lower rate of interest as the risk is much lower for the lender as compared to applicants who are self-employed.
In addition to all of the above factors, the repayment term can determine the rate of interest imposed. Generally, a shorter repayment term leads to a lower rate of interest and vice versa.
Home Loan EMI Related FAQs
A home loan is a sum of money borrowed from banks or other financial institutions to fund the construction or purchase of a house. Certain home loans can also be used for home repairs or renovation. Home loans are a type of secured loan.
There are many factors which affect the calculation of interest rate on home loans. Some of the factors are mentioned here-
- Applicant’s credit scor
- Valuation of the house
- Age and income of the applicant
- Repayment tenure
- Principal amount borrowed
- Debt-to-income rati
If you are searching ‘what is the EMI for 40 Lakhs home loan’, this formula may help you-
EMI = [P x R x (1+R)^N ] / [(1+R)^N-1]
Let’s say that the tenure of your 40 Lakh loan is 6 years and the rate of interest is 8%. Then, your monthly EMI will be -
E = [40,00,000 x 0.00666 x (1+0.00666)^72] / [(1+0.00666)^72-1] = Rs. 70,133/-
EMI calculation can be made in two ways i.e., the flat balance or reducing balance interest method.
- If the interest amount payable is based on the entire loan amount for the full duration of loan repayment, it is known as flat balance interest calculation. In this case, the EMI amount remains the same during the tenure.
- In case of the reducing balance interest rate calculation method, the interest is calculated on the outstanding principal amount each time after the payment of an installment. In this method, the EMI keeps changing throughout the tenure.
You can use Moneyview’s housing loan interest calculator to check how much your EMI would be. Let’s say that the tenure for your 20 Lakh loan is 3 years and the rate of interest is 8%. Then the EMI will be -
EMI = [P x R x (1+R)^N ] / [(1+R)^N-1] {where, P is the principal amount, R is the rate of interest, and N is the number of months in your tenure}
Thus, EMI = [20,00,000 x 0.00666 x (1+0.00666)^36] / [(1+0.00666)^36-1] = Rs.62,673/-
The amount you can avail as home loan depends on multiple factors as mentioned previously. These include -
- Your credit score
- Monthly income
- Debt-to-income ratio i.e., the amount of debt you are paying off with your existing salary
- The cost of your home also matters. Generally, lenders offer up to 90% of the price of the property as loan
- The amount you pay as down payment. Higher the down payment amount, lower will be the loan to be availed
- The repayment term and interest rate imposed. Remember, higher the repayment tenure, higher is the overall interest amount paid.
If you are searching for ‘can you get a home loan if retired’, the answer is yes! It will depend on your age, your credit score, and many other factors. The only thing to note is as your age increases, you will have to opt for shorter tenures. It will also depend on the assets you have.
You can definitely have more than one home loan at the time. There is no law in India that states that you can only have one home loan at a time. Taking multiple home loans will depend on a lot of factors, the most important being -
- Your credit score
- Your debt-to-income ratio
- Your income and age
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