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 |
| Bank | Interest rate | Monthly EMI for 20 Years |
|
SBI |
8.85% to 9.65% |
Rs. 13,352 - 14,129 |
|
HDFC |
8.95% to 9.50% |
Rs. 13,448 - 13,982 |
|
ICICI |
9.25% to 9.80% |
Rs. 13,738 - 14,277 |
|
Kotak |
8.85% to 9.40% |
Rs. 13,352 - 13,884 |
|
Bank of Baroda |
9.15% to 10.60% |
Rs. 13,641 - 15,077 |
A home loan bridges the financial gap smoothly and funds the purchase of your dream home. However, before choosing the loan, ensure you are aware of all the factors that impact the loan, especially the EMI. You can either calculate the home loan EMI using the formula or a home loan EMI calculator online. Calculate the amount you must pay every month and choose wisely.
Lending institutions conduct a thorough credit check to determine the borrower's ability to repay. This involves looking at your net monthly income, savings, investments, existing loans, and, most importantly, your credit score.
The interest rate in the fixed interest rate scenario stays unchanged throughout the loan period regardless of market fluctuations, whereas the interest rate in the floating interest rate scenario can vary depending on market fluctuations.
Yes, you can take out two home loans at the same time if your lender approves your ability to manage two EMIs at the same time. However, the tax benefits for a second home are different, and you must determine whether the property is self-occupied or rented out.
Your eligibility for a home loan is primarily determined by your income and repayment capacity when you apply. Other factors that will determine your home loan eligibility include your age, financial situation, credit history, credit score, and other financial liabilities, among other things.
Yes, you can. If you have enough savings to purchase a home, then it is possible to buy a house directly. A home loan is helpful for those who don’t have enough money to buy a house.
A floating rate is a loan in which the interest rate and the duration of the loan are determined by reference to some index or other measure of economic conditions. As such, floating rates are often referred to as floating interest rate loans because they 'float' according to the market conditions.
If market interest rates rise, so will your repayment. When interest rates fall, so do your dues.
Using the moneyview home loan EMI calculator, we can easily find out the EMI for a Rs. 20 lakh home loan. Let us assume the interest rate is 15%.
After you input the necessary values into the calculator, you will find out that the 20 lakh home loan EMI for 5 years is Rs. 47,580.
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