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How to Use a Home Loan EMI Calculator to Plan Your Dream Home


Nov 28, 2023
Home Loan Calculator

Buying a home is one of the most important decisions of your life. You want to ensure you can afford the monthly payments without compromising your lifestyle and savings. But how do you know how much EMI you will have to pay for your home loan? That is where a home loan EMI calculator comes in handy.

A home loan EMI calculator is a simple online tool that assists in calculating your EMI amount based on the loan amount, interest rate, and loan tenure. It also shows you the total interest and principal amount you will pay over the loan period. This tool lets you plan your budget, compare different loan options, and save interest.

Here, we will show you how to use a home loan EMI calculator, what factors affect your EMI amount, and how to reduce your EMI amount. Read on to find out more.

How to Use a Home Loan EMI Calculator

Using a home loan EMI calculator is very easy. All you need to do is enter the following details:

  • The loan amount is the amount of money you want to borrow from the lender. For example, if you buy a house worth Rs 50 lakhs and have Rs 10 lakhs as a down payment, your loan amount will be Rs 40 lakhs.
  • The interest rate: This is the annual rate of interest that the lender charges you for the loan. It is usually expressed as a percentage. 
  • The loan tenure: This is the duration of the loan or the number of months or years you will take to repay the loan. For example, if you choose a 20-year loan tenure, you must pay the EMI for 240 months.
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Once you enter these details, the PMAY subsidy calculator will automatically calculate your EMI amount using the following formula:

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


P is the principal sum, 

R is the monthly interest rate, and 

N is the loan tenure in months.

For example, if you enter a loan amount of ₹40 lakhs, an interest rate of 10%, and a loan tenure of 20 years, then the housing finance EMI calculator will calculate your EMI as follows:

EMI = [40,00,000 x 0.008333 x (1+0.008333)^240]/ [(1+0.008333)^240-1] EMI = Rs 38,717

That means you will have to pay Rs 38,717 every month for 20 years to repay your loan of Rs 40 lakhs.

You can also see the total interest and principal amount you will pay over the loan period. In this example, the total interest amount is Rs 52,92,080, and the total principal amount is Rs 40,00,000.

You can use this free online home loan EMI calculator tool to try different combinations of the required variables.

How to Reduce Your Home Loan EMI?

  • Choose a Longer Tenure: Opt for a longer repayment period. This reduces your monthly instalments, but keep in mind it may increase the overall interest paid.
  • Refinance Your Loan: Consider refinancing your home loan to get a lower interest rate. This can lead to lower EMIs.
  • Make Part Payments: If you have extra money, make partial payments towards your home loan. It helps in reducing the principal amount and, subsequently, the EMI.
  • Increase EMI Amount with Salary Hikes: Consider increasing your EMI amount when you get a salary hike. This can help in repaying the loan faster.
  • Opt for a Step-Up EMI Plan: Some lenders offer a step-up EMI plan where the initial EMIs are lower and gradually increase over time, aligning with your expected increase in income.
  • Utilise Bonuses and Windfalls: Use any unexpected bonuses or windfalls to make lump-sum payments towards your home loan, reducing the outstanding balance.
  • Maintain a Good Credit Score: A decent score can help you negotiate for a lower interest rate, leading to reduced EMIs.
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Using a home loan EMI calculator is crucial for planning your dream home. This simple online tool helps you calculate your monthly EMI based on the loan amount, rate of interest, and tenure, allowing you to budget effectively. It also reveals the total interest and principal amounts, aiding in comparison and interest savings.

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