How To Calculate The Emi Of Home Loan
How to Calculate the EMI of Home Loan
What is Home Loan EMI?
An EMI (equated monthly installment) is a fixed amount that you need to pay each month to the bank or lender, until you’ve repaid the loan amount in full. EMI is the amount that you must pay each month towards the repayment of your home loan.
What are the components of Home Loan EMI?
Home Loan EMI is calculated using the following components:
- Principal Loan Amount
- Interest Rate
- Loan Tenure
How to Calculate Home Loan EMI?
Calculating Home Loan EMI is a simple process, and can be done using the following formula:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
Where,
- P is the principal loan amount
- R is the interest rate per month
- N is the number of monthly instalments
Examples of Home Loan EMI Calculation
Let's take two examples to understand the calculation of Home Loan EMI:
- Example 1: Principal = Rs. 10,00,000, Interest Rate = 8.5%, Loan Tenure = 15 years
- Example 2: Principal = Rs. 20,00,000, Interest Rate = 9.5%, Loan Tenure = 20 years
Example 1:
In this case, the EMI calculation would be as follows:
EMI = [10,00,000 x 8.5% x (1+8.5%)^180]/[(1+8.5%)^180-1]
EMI = Rs. 9,737
Example 2:
In this case, the EMI calculation would be as follows:
EMI = [20,00,000 x 9.5% x (1+9.5%)^240]/[(1+9.5%)^240-1]
EMI = Rs. 19,633
Conclusion
Home Loan EMI calculation is a simple process, and can be done in a few minutes. All you need to do is to enter the principal loan amount, interest rate and loan tenure in the formula, and the EMI will be calculated instantly. This can help you decide on the loan amount that you can comfortably afford to repay without straining your budget.
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