What is home loan EMI?
Home loans are one of the most popular types of loans. Many financial institutes in India offer home loans to help aspiring home buyers purchase a home. As compared to other kinds of loan like a car loan or an education loan, the amount of money borrowed in a home loan is huge. It is a significant financial commitment, and to help the borrowers repay easily the lenders allow them to pay back in EMIs. If you have availed a home loan, you can repay the amount in smaller amounts, which is pre-determined at the time of taking the loan.
EMI means equated monthly instalment. It is the amount you pay every month to the lender on the specified date. The EMI amount includes both the principal amount as well as the interest. To plan the repayment, you must know the exact EMI amount. Calculating EMI is essential as the amount must be affordable. Typically, the EMI amount is paid through post-dated cheques or by giving auto-debit instructions to the bank.
How is EMI Calculated?
EMI is calculated using the following formula that is based on the combination of the principal amount, interest rate, tenure of loan and computation method.
EMI Amount = [P x R x (1+R)^N]/[(1+R)^N-1]
Here, P is for the principal amount, which is the original loan amount borrowed from the bank on which interest is charged. R stands for interest rate set by the bank. N is the loan duration. Since EMI is a monthly payment, the tenure is calculated in months as well, that is one year will be selected as 12 months in tenure. The P, R and N are crucial elements in the EMI calculation, which can change the outcome on being varied.
What is EMI Calculator?
Calculating monthly instalments on the home loan can seem to be overwhelming and complicated if you try to do it manually. However, you can make the process simple by using an online EMI calculator. It is a handy tool that allows you to calculate your EMI by filling the details of the loan and thus helps you compare faster and plan better. You can select your P, R and N from the sliders provided on online EMI calculator to estimate the monthly instalments on the loan you are planning to borrow. You can change the details anytime and recalculate the EMI.
Why use EMI Calculator?
EMI calculator is a generic calculator that minimises the hassles of calculating the number of monthly instalments and amount on the borrowed loan. All you need to do is fill the three values that are P, N and R as mentioned above. This helps you to estimate the EMI amount and thus plan your repayment better. House loan amount is a vast amount that impacts your overall income. Therefore, knowing the exact amount of EMI will help you plan your budget accurately.