Home Loan

Complete guide on house loan emi calculator for beginners


A home loan is a substantial loan. It frequently lasts more than twenty years and keeps the borrower in debt until the principal loan amount and interest are fully paid off. Since it is among the most significant loans ever taken, one must assess their finances and affordability before applying for a home loan.

To help you understand the nature of EMIs, you can use a free online tool known as the house loan EMI calculator.  You can use the calculator as many as you like for no cost on most loan sites. Let’s look at what an EMI calculator for a home loan is, how to use one, and the many benefits of doing so before applying for a loan.

Factors Determining Your Home Loan EMI

Here are some of the factors that determine your home loan EMI:

Principal Loan Amount: The principal is the money you borrow. If you want to buy a home for 50 lakhs, enter your down payment and the borrowed amount. If you are able to repay a 25% down payment on a 50 lakh house, the principal loan amount would be 37.5 lakhs.

Interest Rate: You have to pay interest on the home loan amount given to you. Each lender has a different minimum interest rate, which you can find on the website of the lender you’re interested in. When calculating home loan EMI, you must at least take into account the interest rate offered by the lender you select and plug in the numbers accordingly.

Tenure: You must also put in the number of months for the loan. Since home loans are for large amounts of money, you can get them for anywhere from 15 to 20 years. But keep in mind that a long-term loan long term will have high-interest rates.

House Loan EMI Calculator

House loan EMI Calculator helps you figure out home loan payments or EMI. It’s an easy-to-use calculator that you can use to plan how much money is needed to buy a house.

Equated Monthly Instalment is what EMI stands for. Repaying your mortgage entails both the principal and interest accrued up to the current balance. The monthly instalment might be reduced by taking out a loan for a longer period (up to 30 years).

How To Calculate EMI On Home Loan

The EMI formula is a method of calculating the monthly loan instalments for a home loan. It is calculated by multiplying the principal value, rate of interest, and the number of EMIs.

The formula for EMI calculation is

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

P stands for the principal loan value, N stands for Loan tenure in months and R stands for monthly interest rate

Your loan’s interest rate (R) is calculated monthly.

Rate of interest (R) = Annual Interest Rate/12/100

If R is 6.2% p.a. then R = 6.2/12/100 = 0.005

Manually calculating the EMI using the formula can be time-consuming. A house loan EMI calculator can help you easily calculate your loan EMI.

How Can A House Loan EMI Calculator Aid In The Planning Of A Home Purchase?

The house loan EMI calculator provides a clear picture of the money that must be repaid towards the EMIs. It aids in making an informed decision about the monthly outflow toward the home loan. This aids in evaluating the loan amount available as well as calculating the personal contribution requirements and property cost. As a result, knowing your EMI is essential for calculating house loan eligibility and better planning your home-buying journey.

Advantages Of A House Loan EMI Calculator

There are numerous benefits to using the house loan EMI calculator tool:

Simple Process: Only the home loan amount, interest, processing fee (if applicable), and duration should be entered. There are no hard calculations or challenging math. The house loan EMI calculator will calculate the rest.

Obtain A Breakdown Of The Finance Charges: The EMI calculator helps you understand the financial expenses connected with your EMI, such as total interest payable and processing fee amount. Since they are shown as a percentage of the total loan amount by banks and financial institutions, knowing the actual value might help you comprehend the exact loan value.

Choosing An Appropriate Tenure: Computing EMIs using a home loan calculator can help you determine the correct loan tenure. If you can pay a larger EMI, you can prefer a short loan term and pay off the loan as soon as possible. Otherwise, you can pay a lower EMI and extend the duration of home loans.

Aids In The Validation Of Information: When discussing a home loan with your bank, you can confirm its repayment duration. The repayment table information provided by the home loan calculator might be helpful. Keep in mind that the figures can occasionally differ. This is because lenders may incorporate additional fees in their EMI calculation.

Aids In Loan Management: When you have excess money beyond your EMI payment, you can use it to repay the loan principal. Use the house loan EMI calculator to review your finances and determine if and how making prepayments can impact your ability to repay the loan in full before the end of the term.

Home Loan EMIs: Tax Benefits

Taking out a home loan can be costly, but it has certain advantages, particularly when it comes to taxes. The government provides tax breaks on EMIs paid each year through the Income Tax Act of 1961. These are the following:

Section 80C: Every year, you can claim a tax deduction of up to Rs 1.5 lakh on the principal value paid towards your property loan.

Section 24: You can claim a deduction of up to Rs 2 lakh on the interest component you pay each year under this clause.

Section 80EE: This section allows you to claim up to Rs. 50,000 in additional interest per year. This is in addition to the sums specified in Sections 80C and 24. Certain limits and conditions apply to this deduction.

Summing Up

With a house loan EMI calculator, you can easily calculate the amount you need to repay for a home loan every month. It is a simple and free process that only takes a few minutes.

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