Home Loan EMI Calculator

What is a Home Loan EMI Calculator?

EMI calculator is a very useful and essential thing if you are taking a loan from any bank or other financial institution. Calculating EMIs is always a task for the borrower but the EMI calculator has made it easy for you. You can use it very easy to calculate your EMIs. Here, We will learn about the EMI calculator and many other important pieces of information about it. Before jumping to the EMI calculator, let’s learn about EMI.

What is an EMI?

A loan is said to be a financial agreement between the lender and the borrower. In this agreement, the lender gives a certain amount of money to the borrower. The borrower repays the money with a predetermined interest rate in monthly installments for a specific period as decided by both parties. These Monthly paybacks are the EMIs. The EMI calculator makes it easy for the borrower and the lender to determine the monthly amount you need to pay. 

Nowadays, almost everyone needs a loan to meet big financial requirements like Buying a car or home, studying, etc. Whatever the type of loan you take, the key components remain the same- Loan amount, tenure, and interest rate.

What is a Loan EMI Calculator?

EMI is the pre-decided payment that the borrower has to pay every month to repay the loan amount to the lender. An EMI comprises of loan principal amount plus the interest rate. EMI calculator is used to calculating the monthly EMI you need to pay to the lender. All you have to do is enter your details like principal amount, tenure, and the rate of interest, it will show you the results in just a few seconds. 

EMI is the very first thing every borrower worries about before taking the loan. EMI is the Equated Monthly Installment that the borrower needs to pay to the lender on a particular date. The loan principal amount and the interest amount are divided into some installments according to the tenure of the loan and this can be calculated easily using the EMI calculator. It will also tell you how many EMIs you have to pay and how many months it will take. 

Paying Such a huge amount altogether is impossible, so the financial institutions break down the amount into smaller installments to make it easy for the borrower to repay it.  EMI is an advantage for the borrowers as it can be paid easily within the tenure period. EMI enables middle-class people to live their dreams like owning a house or a car or sending their children abroad for study. 

EMI Calculator makes it easy to figure out loan repayment amounts according to your budget and you can freely decide the tenure and the principal amount of the loan depending on your income and financial conditions.

As discussed above, the EMI comprises the Principal Amount and the interest amount, the initial EMIs or the front loading mostly focus on the interest amount while the later EMIs mostly focus on the principal amount repayment.

EMIs are usually fixed and the borrower has to pay them every month but it can vary according to floating interest rate loans and prepayments. Although you can calculate your Loan Emi using the formula it is a real task as it requires lots of calculations and mathematical proficiency. To make tasks easier, you can use an online EMI calculator. 

How to calculate EMIs?

The EMI depends on the loan amount, tenure, and interest rate. Before you ap[ply for any loan, you must understand these three components properly. The EMI needs to be paid every month to cover the repayment of the principal amount and the interest amount within the decided tenure.

EMI can be calculated in 3 ways –

• Using Mathematical Formula

The mathematical formula to calculate EMI is-

EMI = [P x R x (1+R)^N]/[(1+R)^ (N-1)]

Here, 

EMI- Equated Monthly Installment

P – Principal amount

R – Rate of interest

N- Tenure

The online EMI calculator also uses the same formula for calculating the EMI. 

Let’s try to calculate and EMI using this formula-

Suppose, You have taken a car loan of 2 lacs, the rate of interest is 20% pa and the tenure is 2 years. Now let’s calculate its EMI using the formula.

20% pa means 1.66 % per month ( as 20/12)

2 years tenure means 24 months

Let’s put it in formula 

EMI = [P x R x (1+R)^N]/[(1+R)^N-1]

EMI= [2,00,000 x 1.66/100 x (1+1.66/100) ^ 24 / [(1+1.66/100) ^ 24 – 1)

EMI= Rs. 10, 179

It means you need to pay Rs. 10,179 every month for 24 months to repay the loan amount you borrowed from the lender. 

This is the universal formula that can be applied to any loan for calculating the EMI. The EMI payment is directly proportional to the Principal Amount and the interest amount while it is inversely proportional to the tenure of the loan

• Using Excel

Excel spreadsheet can also be used to calculate your EMI. You have to use the PMT function for this purpose. The formula to calculate EMI using Excel is PMT (rate, nper, PV).

Here, 

rate- Interest rate

nper- Total number of payments of the loan

PV- principal

• Using Online Emi calculator

An online calculator is the easiest way to calculate the EMI of your loan. It is available online and you can use it for any kind of loan. You can also compare the EMIs of the different loans using principal amount, Rate of interest, and the Tenure of the loan. 

There are different types of EMI calculators available online depending on loans like-

• Car loan 
• Home loan
• Personal loan
• LAP
• Education loan
• Gold Loan

Every calculator works the same as the formula is the same, you can use the calculator which caters to your needs properly. It provides you with the exact result within a second and you don’t have to indulge in long complicated calculations and formulas. All you need to do is a few clicks on your computer. 

Types of EMI Calculators 

There are different types of EMI calculators. This depends on the type of loan you have taken. Here is some example of EMI calculators-

EMI calculator for a home loan

In case you have a home loan, you can use this calculator to calculate your EMIs. Buying a home is a very sensitive task that needs proper planning and research. This is because a home loan is a long-term loan and has a high principal. You can use any EMI calculator available on different websites to make sure of the exact calculation. If you want to calculate your home loan, you need to enter the amount you want to loan, loan period, and interest rate on the calculator.

The loan is provided to the borrower based on his capacity to repay and his property value.

EMI calculator for a Car loan

If you want to purchase a car on loan, you have to calculate the total amount based on the loan amount, loan period, and interest period. There are different rules for a car loan that differ from lender to lender. With the help of a car loan, you can purchase a used car or a new car. However, a car loan has to be paid back within a predetermined period. In case you fail to repay the loan on time, the lender has the right to cease and auction off your vehicle. 

If you do not want to financially strain yourself, you can calculate your car loan beforehand and see how much capacity you have to repay the loan amount.

EMI Calculator for a personal loan

You can calculate a personal loan and calculate how much you need to pay with the help of the EMI calculator. A personal loan can be taken for any reason such as medical expenses or travel. A personal loan is an unsecured loan that makes the interest amount high. The loan period for this loan is also short–term.

With the help of the EMI calculator, you can see how much you can pay back within a stipulated time frame. It needs the same parameters as the other EMI calculators; Loan amount, loan period, and interest rate. When you know how much you have to pay every month, you can plan your financial strategy accordingly. This will ease the financial burden.

EMI Calculator for Education

Everyone wants to have a good education but the cost of quality education has increased significantly. However, with the help of an Education loan, one can sponsor one’s education, within or outside India. Students and parents who are looking for a better-quality education can calculate the EMIs to be repaid with interest rate within the specified period. Students do not need to repay the loan amount immediately. There is a moratorium period after which students can pay back their loans.  Usually, this period is 6 months or when the student gets a job or whichever is earlier. In case you start the repayment during this period, you get additional benefits.

EMI Calculator for Loan against Property

In this loan, one can avail of the loan service against the property owned. This can be any commercial, residential, or land loan. These assets are mortgaged to the lender. You can use how much monthly repayment you need to make with the EMIO calculator designed specifically for this purpose.

You need the same loan parameters; loan amount, period, and interest rate to calculate how much repayment you can make without straining yourself financially. In case you fail to repay your loan, your property which was used as collateral can be seized by the lender to make up for the loan amount.

EMI calculator against property loan functions similarly to the other calculators. However, the one thing that can differ for this loaning period is the restriction on these financial parameters concerning the loan type. 

How EMI calculator works

EMI calculators are ideal for calculating the big loan amount and their repayment within a specified time. These calculators are available online and need a few seconds to show you the exact amount and period of loan repayment.  

To get the results, you need to provide the asked details such as loan amount, period, and applicable interest rate. We have explained the input of an EMI calculator below – 

Loan Amount

The loan amount is the actual amount you are borrowing from the lender. This amount is also known as loan principal. If you want to buy a car, house, or anything that requires a large amount of money then you can take a loan. The loan principal of a borrower depends on multiple factors. The EMI is directly affected by the loan amount. Loan amount means the actual money you borrow is the first input you have to put in your EMI calculator.

Loan Period

The loan period means how much time you have till the full payment of the borrowed amount.  This period varies for different loans, the lender, and the loan amount. For example, if you want to take a personal loan then they have the shortest loan period among other types of loans. A home loan provides a comparatively longer period to the borrower which can be around 25 years to 30 years. 

The interest rate depends on the amount and the period you take to repay a loan. In case you take more time to repay your loans, you will have to pay more EMIs.

Interest Rate

It is the rate of additional charges (interest) that are applied to your loan amount. The rate of interest for loans is different for the borrower and depends on the loan provider. At the time of taking a loan, search which lender has a low-interest rate. It can give you the best information about the different lenders providing loan offers to the borrower. EMI depends on the interest rate of a loan, hybrid, fixed, or floating.

Floating rate EMI calculation 

For calculating floating rate EMI, you should consider two main scenarios that are optimistic and pessimistic. You need to make sure the loan period and loan principal are under your control so it does not strain you financially.

Your interest rate is decided by the lender that is decided by RBI. These interest rates can vary according to the rise and fall in the financial market so you need to consider these two things before calculating your EMI.

Deflationary (optimistic) scenario: In such a scenario the rate of interest is reduced significantly. This can go down to 1 or 3 percent. If you take this situation and calculate your EMI, you will notice that your EMI tenure is reduced. 

Inflationary (Pessimistic) scenario: It is just the opposite of the Deflationary scenario. In such a case, the rate of interest can hike up to 1 to 3%. This raise can increase the additional charges on your loan and extend the loan period.

Floating rate calculation prepares for any circumstances that may occur in the future. Whether in favor or not, you can have a backup plan to manage your finances,

Factors affecting EMI

You need to know that your EMI is not fixed according to your loan period. Many factors affect EMI. AN EMI calculator helps you to know the possibilities and roundabout figures of your loan repayment. Some of the factors that can affect your EMI are explained below –

Interest Rate change 

There are different types of interest rates such as fixed, hybrid, and floating.  If you choose a fixed loan rate then the loan interest rate will remain the same. The floating interest rates can change the interest rate positively or negatively or can remain constant throughout the loaning period. 

A hybrid interest rate is a mixture of floating and fixed interest rates. In such a case at the start fixed interest rate is applicable, later it converts into the floating interest rate.

Loan amount Prepayment 

You have the choice to prepay your loan amount ahead of your loan period. All lenders allow the borrower to make a prepayment of loans. There are prepayment charges applied in case you decide to pay the loan before the scheduled time. This charge is usually around 1-3%.

Loan period change 

You can get the help of your lender in case you want to apply for a new loan term or want to transfer your loan period with a different loan provider. This can change your EMI significantly. You have to make the right decision to decide how long you want to repay a loan or how many additional charges there are.

EMI calculator: Benefits

The most important benefit of the EMI calculator is that it helps the borrower calculate their loan amount and EMIs on a monthly basis. Thus, it can help the borrower to plan his/her loan repayment strategy.

There are many benefits of EMI calculator other than this, some of them are explained below – 

Easy Accessibility

There are many websites on the internet that let you use the EMI calculator free of cost anytime. You now do not have to visit your bank to calculate figures.

Accuracy

The manual calculation can lead to errors. With the help of the EMI calculator, you can calculate the same amount on different websites to check its reliability. EMI calculator provides you with the right figures.

Save time 

This online tool helps you save time while doing the Calculation. It can only take a few seconds to know the estimated EMI. You can try different loan amounts with different interest rates to find the most suitable loan for yourself.

Help you with financial planning

With the help of an EMI calculator, you can do better financial planning as you need the important inputs to feed into it. It can help you choose the best loan period for yourself with a specified loan interest rate. You can plan your financial statement smartly so it does not affect your monthly budget.

Every loan can be calculated on the EMI calculator

As we told you, there are many types of EMI calculators for different types of loans. You can calculate personal loans, car loans, education loans, loans against property easily on the EMI calculator.

EMI calculator – FAQs 

Q1.What is the full form of EMI?

Ans. The EMI stands for equated monthly installments. As the name suggests, you can pay your loan in installment to the lender.

Q2. Explain the EMI calculator?

Ans. EMI calculator is an online tool that helps borrowers to calculate their estimated EMIs on a monthly basis.

Q3. How many types of EMI calculators are there?

Ans. Different types of EMI calculators cater to the different needs of the borrower. Some of them are for a home loan, personal loan, education loan, car loan, etc.

Q4. What is a floating interest rate? 

Ans. A floating interest rate is a type of interest rate that varies according to the inflammation and deformation of the financial market.

Q5. What are the different types of interest rates?

Ans. There are three types of interest rates; floating, fixed, and hybrid. The borrower can choose among these interest rates. 

Q6. What is a hybrid interest rate?

Ans. A Hybrid interest rate is the mixture of the fixed interest rate and floating interest rate. one has to pay the initial loan period under fixed loan interest rate and floating interest rate.

Q7. How can I access an EMI calculator?

Ans. You can access an EMI calculator on any financial website. There is no charge for using an EMI calculator. Some Bank websites also provide EMI calculators.

Q8. Does SBI provide an EMI calculator in India?

Ans. Yes, SBI offers an EMI Calculator to calculate the estimated amount for repayment. You can visit the official website of SBI.

Q9. What is the longest tenure for a home loan?

Ans. The longest period for the repayment of the home loan is around 30 years. It is one of the long-term loans.

Q10. What are the factors that affect the loan eligibility of a borrower?

Ans. There are many factors such as CIBIL score, monthly income, age, loan amount, loan period which decide the loan eligibility of an individual.