Home Loan EMI Calculator
Planning is an important part of every endeavor of life. Be it buying property or taking a loan, both require good amount of planning. Quick decisions, taken without planning can sometimes dent your finances very badly. Therefore, you need to plan well in order to make wise decisions. Taking a home also loan requires good amount of planning, as you are borrowing a hefty sum which needs to be repaid. Therefore, using a home loan EMI calculator can help you plan ahead. Paying off home loans available in India with the accrued interest within a stipulated period of time or the loan tenure requires precise financial planning.
You need to assess your repayment capability before you opt for the loan so that you do not end up in a financial crisis. Here, EMI calculators can be best put to use. A calculatorused for computingEMI of a home loan is a home Loan EMI Calculator. It is an easy-to-use tool and can be used anytime free of cost calculate the monthly installments that you will pay towards your home loan repayment. The calculator just requires a few details of your home loan and gives an accurate result. It is best to use ahome loan calculator in Indiaprior to applying for a loan as it not only computesyour EMI but also helps you assess yourrepayment capacity.
What’s New in Paisabazaar’s Home Loan EMI Calculator?
With homes being our biggest investment, it is important we do it right. Use our home loan calculator to compute your EMIs beforehand so that repaying home loans does not strain you financially. Paisabazaar’sHome Loan EMI Calculator is an online tool thattakes you a step closer to deciding on the home loan you want to apply for, in the following ways:
Instant results: Our EMI calculator for home loanscuts short your lengthy and tedious arithmetic calculations to seconds. You get your EMI calculated instantly, with a click of a mouse without the hassles of pen, paper or calculator.
Easy-to-use: Paisabazaar’sEMI calculator has been designed in such a way that anyone can use it without any prior training. You just need to enter simple details about your loan in the space provided or you can use the sliders for your inputs.
Try different combinations: You can experiment with the calculator by adjusting the sliders. You can vary the amount, interest rate and tenure, to reach an EMI amount which you find right for your home loan. You can recalculate your home loan EMI as many times as you want with Paisabazaar’sHome Loan EMI Calculator.
Free: You can use this calculator any number of times you wish without any cost. This online tool is available 24*7 on PaisaBazaar’s website.
How EMI Calculator works ?
Home loan EMI calculator computes the EMI according to the details entered by you in the calculator. The EMI calculator for home loans works on the following inputs:
Loan Amount: The sum of money you borrow for purchasing a house is the home loan amount. The amount that can be borrowed depends upon the cost of the property as well as the repayment capacity of the borrower. (Note that a lender can only give 80% of the property value as loan.) This is called the principal amount of the loan and the rate of interest is applied on it. The final amount (post levy of interest rate) is then divided equally through the tenure of the loan. You can enter the amount you wish to borrow into the EMI calculator. Enter an amount keeping in mind that EMI or monthly installments cannot account for more than 40% of your monthly income.
Interest Rate: This is the rate at which interest is levied on the amount lent. Home loan rates vary from one financial institution to another, so it is best to check the interest rates before applying for a home loan. Interest rate can be either fixed or floating. In case of fixed, the interest rate remains unchanged for the entire loan tenure and all loan EMIs are equal. However, in case of floating interest rate, the rates fluctuate with any change in the base rate and hence the EMIs vary.
Tenure: It is the time allotted to or chosen for repayment of the loan. Most of the loans come with flexible loan tenures. Home loans are long term loans with long repayment tenure of up to 20 years, in some cases even continuing for 30 years. You can choose a loan tenure as per your choice, but remember the longer tenure you choose the more interest you will have to pay.
The home loan EMI calculator works on two arithmetic formulae and includes two calculators, home loan interest calculator and home loan EMI calculator. The first calculator used to calculate the monthly interest on your home loan and works on a simple formula. In comparison, the second calculation is a lengthy and complex one and is used to calculate the home loan EMI. Therefore, it is better to use a home loan calculator to calculate the EMI for the loan.
Home Loan Interest Calculator Computes the Monthly Interest Rate
While choosing a home loan, the factor most people give importance to is the interest rate. It is the rate at which interest is charged on your home loan amount. Every financial institution charges interest on the lent amount. This rate is generally offered as an annual one. So, in order to calculate the monthly EMI, this rate needs to be converted into a monthly rate.
To convert the annual rate into a monthly rate, you will need to divide the annual interest rate by 12, for example, if you are being charged interest at the rate of 12% per annum, then the monthly rate of interest on your home loan will be 1% per month. You can also use the interest rate calculator for calculating monthly home loan interest rates. Interest rate calculator is an online tool which lets you know the per month interest rate when you input the annual home loan interest rate.
Home Loan EMI Calculator Computes the EMI for Home Loan
Manual EMI calculation is a long and tedious process which can be time consuming and exhausting. For calculating EMI, you need to know the loan amount, the tenure you want to borrow the amount for and the interest rate that you will be charged. You should keep in mind that all that you enter into the EMI calculator should be in months, i.e. the loan tenure and the interest rate.
To calculate thehome loan EMI the following formula is used:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1],
In this formula, the letters stand for:
EMI is the equated monthly installment
P is the principal or the amount that is borrowed as a loan
R is the rate of interest that is levied on the loan amount (the interest rate should be a monthly rate)
N is the tenure of repayment of the loan or the number of monthly installments that you will pay (tenure should be in months)
It is not easy to calculate EMI applicable on your home loan using Excelor by hand, as it is a complicated one. Hence, it is best to use a home loan EMI calculator for the same. Using a housing loan calculator you can calculate the EMI within seconds and save yourself from time consuming tedious calculations.
Benefits of using Home Loan EMI Calculator
Calculating EMI for a home loan manually includes many calculations and can sometimes yield wrong results. Wrong calculations can change your home loan EMIs, and you might make a wrong decision while choosing the home loan. Therefore, you cannot always bank upon manual calculations. It is always wise to use a Home loan EMI calculator to get accurate results.
Helps you better plan your finances
EMI calculator can be of great use as it not only helps you to calculate the home loan EMIs but also helps you to gauge your repayment capacity. By applying multiple permutation and combinations to the determinants of the Home loan calculator, you can find the EMI amount thatyou are comfortable paying each month. Never ever go for an amount thatyou will not be able to pay back as it might strain your finances and also affect your credit score in case of home loan repayment default.
Offers a list of housing deals just for you
Once you have computed your EMI using the home loan EMI calculator, the latterdisplays a list of home loan quotes that fit your requirement and eligibility. These quotes are consolidated by the tool after proper research of the loans available in the market. This list also includes the distinctive features of each loan, like the interest rate, tenure, loan amount, among others, to help you make an informed choice. You can choose the best suited loan from the home loan schemes offered to you.
Home Loan Repayment Calculator
If you are making regular monthly payments on your home loan, you can use home loan repayment calculator to know how much more time will it take in order to pay off the entire borrowed loan for a given interest rate and EMI.
Home Loan Amortization Schedules
An amortization schedule is a tabular display which details the periodic payments made towards a loan. It systematically displays the loan repayment process in a table form. When you pay an EMI, a portion of it goes towards the principal component and a portion towards the interest component of the loan amount. The percentage of EMI going towards the interest component versus principal can be determined by an amortization schedule.
Every EMI you pay is divided between interest and principal amounts of the loan. But, the exact amount that goes towards the principal component each time varies and the money which is left goes to the interest component. At the start of the loan tenure, a large chunk of each EMI is devoted to interest. As the home loan matures, a higher component of EMI goes towards the principal. The home loan EMI calculator is not programmed to provide you with the bank’s amortization schedule.
A home loan amortization schedule contains all the necessary information related to home loan repayment such as loan amount, period of scheduled payments, and outstanding balance. It further provides the home loan EMI breakup detailing the repayment towards the interest and the outstanding principal of the loan. The amortization schedule is prepared by financial institutions employing complex mathematical calculations. This schedule helps borrowers make decisions related to prepayment or refinance of loan and also provides details of interest for availing tax exemptions.
Step Up and Step Down EMI
Home loan EMIs can also be categorized according to the expected increase or decrease in the salary of the borrower. On this basis, EMIs can be of two types: Step up EMI and Step down EMI.
In step up EMI, the monthly payments gradually increase according to the expected increase in the salary of the borrower in the future. Under this, the EMIs at the start are lower and increase gradually as the loan tenure progresses. The change in EMI would be done two times for the entire tenure of the loan and this feature has not been included in the home loan EMI calculator. This is a good option for those who are the start of the career, not having a sound financial stability.
However, in the case of step down EMI, the initial EMIs are higher, which gradually decrease with the number of payments done. Step down EMIs are a good option for those having good financial stability or those nearing their retirement.
What is Home Loan?
Home loan is a secured loan granted for purchase of property. The property is mortgaged as security for the loan amount to the lender and the property deed remains with the lender till the loan is paid back in full. Surging property prices have made it practically impossible for potential first-time buyers to buy a property merely based on their savings. With people aspiring to own their own house at an early age, lenders are coming up with new and attractive home loan products to cater to the requirements of the prospective home buyers.
Owning a house is every person’s dream but a substantial investment goes into buying a house which cannot be funded out of the pocket. Here comes the use of a home loan, which is sanctioned to finance purchase, construction, renovation, extension, etc. of existing or new property. Home loan is offered by Banks and NBFCS and the sanctioned amount depends upon the value of the property and the income of the loan applicant. Using the home loan EMI calculator you can determine what part of your salary will go towards loan repayment.
Home loans are benefiting for property buyers in two ways, one they finance the purchase of your dream home and secondly they help you save on taxes. But, it is very important to make a wise decision considering all the factors associated with a home loan. With your hard-earned money at stake, it is important to make sure that you decide on taking a home loan after conducting a thorough loan market research on the different home loans available in India.
Why take a Home Loan?
Applying for home loans are an affordable way of owning your own house without facing a financial crunch. For instance, if you want to purchase a house but are falling short of funds or do not have money pay out right away, then home loan is really useful. Lenders offer finance for purchasing a house with the ease of paying it back in parts home loan EMIs(Equated Monthly Installments). Interest at a particular rate is applied on the lent amount and then the EMI is calculated according to the tenure of the loan.
The reasons which work in favor of taking a home loan are:
Funding for your house:
Buying a house is definitely one of the biggest investments we make in our lifetime. It involves a hefty sum of money and it is not possible for most of us to buy it from our savings. You can get a home loan to help you realize the dream of owning your own house. Repaying home loans is easy as you can pay back the borrowed amount in parts, i.e. EMIs or monthly installments over longer repayment tenure. This can easily be illustrated by using the home loan EMI calculator.
Building your Credit Score:
Credit score essentially quantifies the creditworthiness of an individual. Based upon this score, lenders assess the repayment capacity of an individual and decide on whether or not to sanction a loan to him. Home loan has a long repayment tenure of up to 20 years (even 30 years in some cases) which makes it a good option for building up your credit score.
Property priceshave continued their positive run over the years and are expected to maintain this surge in the coming years as well. Therefore, capital appreciation is the biggest reason for investing in a property. Along with the surge in property prices, construction costs and rents have also risen substantially in the recent times. These reasons, make investing in a home is more lucrative deal than other investment options as it can shield you from inflation for a long term.
Enjoy Tax Benefits on the Interest Paid and the Principal:
Subject to Section 24(b) of the Income Tax Act, 1961 a tax deduction up to Rs. 2 lakh on the total interest payable on the home loan can be claimed. The interest paid during the pre-acquisition or pre-construction period can be claimed for tax deductions in five equal annual installments starting from the year in which the house is acquired or constructed.
As per Section 80C of the Income Tax Act, 1961, the principal repayment up to Rs. 1.5 lakh on your home loan can be availed as a deduction from the gross total income.
In the recent financial Budget 2016, first time home buyers have been given an additional deduction of Rs. 50,000 under Section 80EE.
This additional deduction under Section 80EE is subject to certain conditions, which include:-
This can be availed only if the value of the purchased property is less than Rs. 50 Lakhs and the loan taken is less than Rs. 35 Lakhs.
This is valid for loans sanctioned between 1st April 2016 and 31st March 2017.
The benefit of this deduction can be available for the entire repayment tenure.
Things to Consider before Taking a Home Loan available in India
Thinking of applying for a home loan for buying a house? Make sure you go through the below mentioned points before you make the final deal:
• Check your home loan eligibility:
Home loan eligibility is an important factor to consider before you think about taking a home loan. Understand the eligibility criteria of the home loan schemes on the offer and check whether you are eligible for a home loan or not before applying for it. With the world becoming more tech savvy, you need not visit the bank anymore to check whether you are eligible for a home loan or not. Rather, you can use the home loan eligibility calculator to check your home loan eligibility.
• Research well:
With so many lenders in the market trying their best to attract home buyers with different deals on home loans, it becomes imperative to compare the home loan products in the market before you avail a home loan. Lenders offer low interest rates and other benefits like waiving off additional charges associated with the loan. Therefore, in order to make an informed choice, it is best to go through the terms and conditions of each loan agreement.
• Know your EMI:
Calculate the home loan EMIs before applying for a home loan, to know whether you will be able to afford the loan or not. You will have to fund the Home loan repayment from your own pocket therefore; it is wise to consider your income and repayment capacity before you make the final choice. Home loan EMI calculator allows you to make a calculation about the EMI amount you will have to pay when you borrow a loan of a given amount for a given tenure at a particular interest rate. Take your time and consider all the factors which can impact your repayment. You can also use the EMI Calculator to reach an EMI amount that you are comfortable paying every month.
• Additional Charges to Be Kept In Mind:
We are so busy looking for the lowest interest rates that most of the times we overlook the other charges that are associated with the loan. Therefore while applying for a home loan, it is important to check all the other charges. These charges can include, processing fee, MODT charges, legal verification charge, loan conversion charge, etc.
Home Loan Features and Benefits
Home loans are secured loans having a number of features and benefits that set them apart from other unsecured loans. These differentiating features of a home loan include:
Home loan can be availed for the following purposes
Purchase of new property, such as a house, flat, plot, land, etc.
Construction of house on a plot already owned
Extension of existing property
Refurbishing or renovating existing property
Home loans are long-term loans that are sanctioned for a period of up to 20 years (some banks offer 30 year tenure as well). As they are long-term loans, you would need to plan well for repayment. Also, due to the long repayment tenure the risks involved in case of a home loan is high. You can figure out the effect of a longer or shorter tenure by using the home loan EMI calculator.
Home Loan Interest rate
Being a secured loan, the interest rates for home loans is lower as compared to the unsecured loans. Home loan interest rate varies from one bank to another. Currently, they are available from 9.40% onward, thanks to the recent rate cuts prompted by the Reserve Bank of India. According to the type of interest rate chosen, home loans can be floating rate,fixed rate or hybrid rate.
The loan amounts involved in case of other loans is small however, for a home loan the loan amount is generally large. Housing loans amounts can go up to crores. Lenders usually offer up to 80% of the cost of the property (including the cost of the land) as your loan. However, for properties worth less than Rs 30 lakhs, banks can now lend up to 90% of the value as loan. For loans above Rs 75 Lacs, it can be maximum 75% of the cost of the property. The amount sanctioned is also based upon the repayment capacity of the borrower.
To avail a home loan, the property documents need to be surrendered as a security for the loan. In case the borrower is unable to repay the loan, then the lender can make up for the loss by reselling the property which has been financed. The borrower needs to submit the title deeds and other documents to the lender as security.
Applicant & co-applicants
Home Loans can be applied for either singly or jointly with other family members, like mother, father, spouse, son or daughter. All the proposed owners of the house for which finance has been availed, will have to be co-applicants in the loan. However, the co-applicants need not be co-owners.
Home loans come with tax benefits and the best part is that all the loan applicants can avail the tax benefits individually. Benefits of tax deduction are available for interest paid on housing loans. Tax benefits on your home loan can be availed as per provisions of the IT Act, 1961, which is subject to change.
A few lenders even offer attractive insurance schemes along with the home loan. But, this insurance cover is offered at an additional charge. It is solely your wish if you want to avail this insurance cover, or get your house insured from any other company which offers better insurance options.
Additional charges and penalties
There a lot many charges associated with the loan amount and these charges are levied as a flat rate or as a percentage of the loan amount. These charges include processing fee, Prepayment fee, MODT charge, Legal verification charge, Loan conversion charge, etc.
Types of Home Loans
With more and more home buyers opting for home loans, home loan providers are coming up with new and amazing housing deals. In order to cater to the varying requirement of the housing loan borrowers, lendersare offering different housing finance schemes.
The different types of home loans have been enlisted below to help you understand home loans in a better way.
Land Purchase Loan:
You can take this loan when you are buying a land or a plot either for construction or investment point of view. The maximum loan amount sanctioned is usually between 80-85% of the cost of the property, but it also depends upon the lender. You will not be entitled to avail any tax benefits for land purchase, tax benefits can only be availed once the construction starts.
Home Purchase Loan:
If you are considering buying an existing property like a row-house or a flat, then a home purchase loan is best for you. This loan entitles you to avail tax benefits under Section 80C and Section 24 (b) of the Income Tax Act. For a home loan taken jointly with another person, the tax benefits can be availed by all the co-applicants of the loan. The tax benefit is not apparent when using the home loan EMI calculator.
Home Construction Loan:
As the name implies, this loan can be availed in case you wish to carry our construction on a piece of land which you already own. An estimate about the cost of construction needs to be submitted with the bank. The bank then verifies the property and evaluates the estimate before granting the loan.
Home Conversion Loan:
This loan can be availed if you wish to purchase a new house but still have an outstanding loan amount on your previous home loan. With home conversion loan, you can transfer yourexisting loan to a new home loan. These loans can be a little expensive considering the rate of interest linked to them.
Home Improvement Loan:
A home improvement loan can be a smart choice in case you are thinking about renovating, or extending your existing property. This loan funds all kinds of renovations, such as adding a floor to your house, getting it painted, waterproofing, tiling, plumbing and many more things. You can calculate the home improvement loan EMIs by using the home loan EMI calculator.
Balance Transfer loans:
If you wish to transfer your existing home loan from one bank to another, then Balance transfer loans can help. This loan can be availed to repay the remaining amount at lower interest rate than provided by the existing lender. Banks such as ICICI Bank, Deutsche Bank, Kotak Mahindra Bank offer this facility among other lenders.
Reverse Home Loans:
Reverse home loan can be availed by a senior citizen, i.e. a person above the age of 60 years. In this loan, a senior citizen mortgages their house to the lender while still remaining the owner of the house and living in it, to get monthly or periodic payouts.
Loan against property:
You can take a Loan against property by mortgaging an existing houseto the lender. This is a secured loan and can be availed for any purpose. The home loan EMI calculator has a separate version for calculating the EMI on loan against property.
Fixed, Floating and Hybrid Home Loan Rate of Interest
Home loan EMI can be calculated according the rate of interest, fixed, floating or hybrid.
Fixed rate home loans: In such home loans, the interest rate charged is fixed for the entire loan tenure. Therefore, the EMI paid every month also remains the same for the entire tenure. It is a good option for people who want to pay fixed EMIs throughout the loan tenure.
Floating rate home loans: In such home loans, floating interest rates which vary with the market lending rates are applicable. The EMI also fluctuates according to the change in the interest rate. Floating interest rate home loans are cheaper as compared to the fixed rate ones. But, the major drawback with these loans is that they create budgeting issues as the EMIs of such loans are uneven in nature.
Hybrid rate home loans: Hybrid home loans are a combination of floating and fixed interest rates. Under this type of home loan, the bank offers a fixed rate at the start of the tenure for a few years and after that the prevailing floating rates come into action. Hybrid home loan is a smart choice for those who want fixed EMIs in the first few years of their home loan. Fixed EMIs help in budgeting the monthly finances in a better way and is a good option for those at the start of their career. Separate calculations may be required using the home loan EMI calculator to determine the EMI in case of hybrid rate home loans.
Key Factors Impacting Home Loan Interest Rates
The interest rates on home loans have a major impact on the EMI payable to service the loan. In case of the home loan EMI calculator, as interest rate inputs need to be made by you in order to provide the applicable EMI payouts. It therefore very necessary to know and understand the key factors may influence the applicable interest rate of home loans. By knowing these factors, new home owners as well as prospective applicants can ensure that they are in a position to service the home loan to the best of their abilities.
1. The Macroeconomic conditions in the country
Macro economic conditions of the country are one of the keyfactors that affect the interest rates applicable to a home loan.Whether the rates would soar or dip depends among other factors on the GDP growth and prevailing rate of inflation in the country. In a growing economy such as India, there is a growing middle class with high aspirations for the future therefore such an economy would be driven through increased consumption. To fuel this consumption, there is an increased demand for capital for both commercial expansions as well as for personal expenses. In such a case, home loan business rates are bound to rise.
2. Inflation Trends
Inflation is always a key factor to consider especially in case of economies that depend on deficit financing such as India. From the lender’s point of view, it is necessary to set the rate of interest charged on a loan at a rate that is higher than the rate of inflation so that the lender makes a profit on the transaction. Otherwise, the lender’s business would show a negative growth rate and result in losses. Similarly, in case of a decline in inflation, the interest rates on home loans would follow a similar trend.
3. Policy Changes enacted by the Reserve Bank of India
India’s central bank, the Reserve Bank of India (RBI) is engaged in formulating and implementing the monetary policies governing the country. Some of the key areas where RBI plays a major role include CRR (cash reserve ratio), capital liquidity, money supply through deficit financing, Repo and reverse rates, statutory liquidity ratio and more. Changes in these policies play a major role in affecting the interest rates that are charged by lenders who provide home loan to the general populace. However, it is interesting to note that the RBI affects such changes based on the macro economic conditions featured in the economy.
Home Loan Eligibility and Documentation
The home loan eligibility is determined according to the following criteria:
Age- The minimum age at the time of application should be 21 years. Repayments have to be completed before the age of 60 or 65.
Income- A minimum net monthly or annual income is prescribed by every lender as a criterion of eligibility for availing a home loan. This income criterion varies in the case of salaried, self-employed and working professionals.
Employment experience- Whether salaried or self-employed, every loan applicant needs to have a minimum number of years of work experience as stipulated by the lender.
Place of residence- The applicant must have a minimum stay of at least 1 year at his current place of residence.
Credit score- This score tells about the creditworthiness of the loan applicant, i.e. his repayment ability in the past. This score is considered as an important parameter for sanction of a loan.
Home Loan Documentation
Duly filled and signed loan application form with passport photographs
Identity, age and address proof
Last 6 months bank statement
Documentation for salaried applicants:
Latest 3 months’ salary slips
Form 16 or Income Tax Returns
Documentation for self-employed applicants:
Latest 3 years Income Tax Returns with computation of Income
Latest 3 years CA Certified / Audited Balance Sheet and Profit & Loss Account