EMI calculator is used in calculating the equated monthly installment figures for a loan. EMI is the monthly installment that you have to pay to the bank or any other financing institution as repayment for your loan.
The loan could be for financing a home, car, two-wheeler or a home appliance like a washing machine, refrigerator, microwave etc. It has two components, the principal amount and the interest.
Online EMI Calculator for Home Loan
How to use EMI Calculator for Home Loan
To use the EMI calculator for a home loan, you should have four figures with you. They are Cost of property, Percentage of the amount you want finance for, interest rate and tenure (years).
The Cost of the property is the Actual Cost of your property. Percentage of Cost of the property is the amount that the bank is going to finance. It is usually a maximum of 80%. The rate at which the finance provider is providing the loan is the interest rate. You can get the interest rate directly from a financing institution or get it from the provider’s website.
If you have these figures ready then just feed it into the EMI calculator above and voila, you have your monthly installment figure.
The Monthly Installment is your monthly payment that is due to the bank.
Interest Amount is the total interest component of the loan payable on the principal amount.
Types of EMI
Flat Rate Method – In this method, the principal amount remains the same for the tenure of the loan. For example if you take a loan of Rs 10,00,000 for a tenure of 10 years at a rate of 8.5%, the EMI would be 15,415 calculated as (10,00,000+(10,00,000 x 10 x 0.085))/10×12).
Reducing Balance Method – In the reducing balance method the principal amount reduces with each EMI. So the EMI for similar loan would be Rs 12,399 calculated as ((10,00,000 x (0.035)) x (1 + (0.035 / 12))120;) / (12 x (1 + (0.035/12))120; – 1).
The second method reduces the borrowing cost for you and it is also the method that is commonly used by most financial institutions. The EMI calculator given above uses the reducing balance method.
Read this write up on getting a loan to know about the eligibility and other requirements.