How does the Money View Mortgage Loan EMI Calculator work
Every loan is repaid through a set amount of money each month called EMI (Equated Monthly Installment)
from the borrower to the lender until the loan amount has been repaid fully.
The EMI amount is determined by the principal amount availed, the interest rate charged, and the repayment term.
Knowing the EMI amount that you will potentially have to pay will help you plan out your finances and check the impact of the same on your budget.
We understand that such calculations might be tedious and prone to mistakes. Therefore, we have designed our calculator to be as simple as possible. To use our calculator all you will need to do is as follows -
• Enter the loan amount that you want to avail yourself of.
You can use the slider to adjust the amount.
• Next, provide the rate of interest and this can be adjusted by using the slider.
• Lastly, use the slider to enter the repayment tenure.
That’s it! Three simple steps to find out the EMI amount you will have to pay. EMI calculation has never been simpler.
Mortgage Loan EMI Calculation Formula
The formula to calculate your mortgage loan EMI is as follows -
P x R x (1+R)N / [(1+R)N-1]
• P is the borrowed principal amount.
• R represents the rate of interest.
• N is the tenure in the number of months.
For example, if Rs. 20,00,000 is the amount borrowed (P), 5% is the rate of interest imposed (R),
and the 24 months is the tenure (n), the EMI to be paid using the above formula will be:
20,00,000 x 0.0041 x (1+0.0041)24 /
[(1+0.0041)24-1] = Rs. 87,742.78 (per month)
The rate of interest (R) is calculated monthly i.e. it is calculated as (Annual Rate of interest/12/100) in this case (5/12/100 = 0.0041)
Mortgage Loan Amortization Schedule
In addition to knowing the EMI amount to be paid, one must also be aware of the amortization schedule of their loan repayment.
This is a table of periodic EMI payments that illustrates the amount of principal and interest left in each payment until the loan is paid fully.
While the EMI amount may remain the same, the principal and interest amount will vary each month.
Take a look at the table below which shows the EMI schedule for the example given above.
Factors Affecting Mortgage Loan Interest Rates
Given below are some of the most important factors that impact
Mortgage loan interest rates -
Your credit score is a measure of how creditworthy you are and is based on your credit history, repayments made, loans availed, etc.
Higher the credit score, lower is the interest rate as the lenders perceive you to be less risky when it comes to repayments.
A credit score of over 700 is always advised.
The higher the loan amount, the higher is the interest rate. Essentially, if the lender perceives the risk of repayment to be high,
the interest rate charged is also on the higher side. Higher loan amounts will put a greater burden on the borrower’s finances making
it more difficult to repay.Therefore, the interest rate for a large loan amount is always high.
WThe shorter the repayment period, the lower is the interest rate.
However, borrowers may opt for a longer loan term as the EMI amount will be lower.
This is definitely financially more viable for the borrower but the amount paid as interest will also be higher over time.
• Type of Property Being Mortgaged
Depending on whether the building in question is commercial or residential or is located in an upcoming area with a lot of amenities,
the interest rate can vary.
Generally, newer buildings in well-to-do locations are considered to be more valuable hence the interest rate in such cases is lower.
Is the borrower self-employed or salaried? Has the borrower availed multiple mortgage loans before?
Is the income earned by the borrower on the higher side? The answers to these questions will also determine the interest rate.
The lesser the perceived risk of default, the lower is the interest rate.