A home loan can help you realize your dream of owning a piece of paradise. In this article, let us look at the factors affecting home loans and Rs. 20 lakhs home loan EMI.
A home loan is the amount of money an individual borrows from banks or other financial institutions to purchase a residential or commercial property. This loan can be to purchase a new or resale home, build a home, or renovate or extend an existing one. The money is borrowed at a fixed interest rate and repaid over time in smaller installments known as EMIs (Equated monthly installments).
The amount you pay as an EMI on your Rs 20 lakh home loan will be determined by two factors: the home loan interest rate and the loan repayment term.
Let us now look at an example of how to calculate EMI.
Arun has decided to buy a house. After meeting the lender's requirements, the bank decides to give Arun a home loan of INR 20 lakh, with him producing the remaining cost of the house as a down payment.
The bank has offered him a 10-year home loan with an annual interest rate of 8.4%. The monthly EMI amount that Arun will pay is calculated using the formula below:
P x R x (1+R)^N / [(1+R)^N-1]
P: Principal loan amount = INR 20,000,00
N: Loan tenure in months = 10 years or 120 months
R: Interest rate per month [8.4/12/100] = 0.007
EMI= INR 20,00,000 * 0.007 * (1 + 0.007)120 / ((1 + 0.007)120 – 1) = Rs. 24,690.
As a result, Rs. 20 lakh home loan EMI will be Rs. 24,690. Overall, he will pay Rs. 29,62,800, of which Rs. 9,62,800 will be the total interest paid on the principal borrowed sum.
You can also calculate home loan EMI by using a calculator like this.
Your age is an important factor in determining home loan eligibility. The younger you are, the more likely you are to be approved for a home loan. You can also get a loan for a longer period if you are young.
The amount you can borrow is heavily influenced by your income stability. You must have a consistent income whether you are a salaried employee or self-employed.
A high credit score and a track record of timely repayment will increase your chances of loan approval.
Lenders assess your existing liabilities, such as personal loans, credit card bills, car loans, and so on, to ensure you have the financial capacity to repay the home loan. If you have no liabilities, your loan may be approved without any problems.
The 20 lakh loan EMI for 10 years from various banks is as follows:
| Bank | Interest rate | Monthly EMI for 10 Years |
|---|---|---|
| SBI | 8.85% to 9.65% | Rs. 25,173 - 26,044 |
| HDFC | 8.95% to 9.50% | Rs. 25,281 - 25,880 |
| ICICI | 9.25% to 9.80% | Rs. 25,607 - 26,209 |
| Kotak | 8.85% to 9.40% | Rs. 25,173 - 25,770 |
| Bank of Baroda | 9.15% to 10.60% | Rs. 25,498 - 27,099 |
Since the tenure is short, the EMI for Rs. 20 lakh home loan will be higher.
| Bank | Interest rate | Monthly EMI for 5 years |
|---|---|---|
|
SBI |
8.85% to 9.65% |
Rs. 41,371 - 42,150 |
|
HDFC |
8.95% to 9.50% |
Rs. 41,468 - 42,004 |
|
ICICI |
9.25% to 9.80% |
Rs. 41,760 - 42,298 |
|
Kotak |
8.85% to 9.40% |
Rs. 41,371 - 41,906 |
|
Bank of Baroda |
9.15% to 10.60% |
Rs. 41,662 - 43,037 |
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Disclaimer
The starting interest rate depends on factors such as credit history, financial obligations, specific lender's criteria and Terms and conditions. Moneyview is a digital lending platform; all loans are evaluated and disbursed by our lending partners, who are registered as Non-Banking Financial Companies or Banks with the Reserve Bank of India.
This article is for informational purposes only and does not constitute financial or legal advice. Always consult with your financial advisor for specific guidance.
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