8 Things You Must Know About Home Loan EMI Calculator

Team Kotak Mahindra Team Kotak Mahindra
Dec 15, 2022 3 min read
8 Things You Must Know About Home Loan EMI Calculator

Before going for renovation or buying a new house, you must analyse your financial budget. It refers to managing financial inflow and outflow- you need to match the loan repayment schedule with the upcoming inflow to avoid default payments. This is where the home loan calculator comes into the scene. It is a self-help tool which automatically calculates EMI based on required inputs.

Your EMI is impacted by various variables such as loan tenure, interest rate, and principal amount. Therefore, you can calculate the EMI which suits your budget by adjusting the variables. Read on to understand all the variables in detail.

How Does the Home Loan EMI Calculator Work?

As aspiring borrowers, the first and foremost duty is to accurately estimate the EMI amount they would be responsible for paying. A house loan EMI calculator may be used to get an accurate estimate.

Therefore, you can use a home loan calculator to estimate how much you'll have to pay monthly for your mortgage before applying for a loan.

The formula used to calculate EMI is: E = P * r * [(1+r)^n / (1+r)^n -1], where,

E = EMI

P = Principal

R = rate of interest calculated monthly

N = loan tenure in months

Note that the EMI is calculated based on fixed interest rates. And the EMI fluctuates based on the prevailing marketing rates.

Things to know about Home Loan EMI Calculator

The home Loan EMI calculator uses a simple formula to calculate the EMI. EMI means the equated monthly instalments. These instalments are inclusive of principal and interest.

The EMI calculator also tells about the eligibility for a loan and the house loan amount sanctioned for a property as collateral.

  • The EMI calculator is an easy-to-use tool that does not ask for personal or professional information. You just need to input the principal, loan tenure and interest rate to calculate EMI.  After that, you will be able to know everything about your Amortisation schedule. It will help you understand how your monthly EMI will be segregated between paying off the principal amount and the remaining amount at the end of the month.
  • Along with a graphical representation of the repayment schedule and a breakdown of the EMI into principal and interest payments, some EMI calculators also display the total amount of the EMI.
  • Some comprehensive EMI calculator also integrates running EMI, local state tax, and insurance cost in the calculation.
  • Apart from home loans, you can calculate EMI for car loans and Personal Loans. Also, you can adjust the EMI in arrears or EMI in advance while calculating for car loans.
  • EMI calculator is a ready reckoner tool which can be used to compare the loan offers of various institutions. It helps substantiate the variables into a comparable figure- EMI. It also calculates the gross cost of the loan, i.e., the total interest and other charges paid over the loan tenure.
  • You can also use the home loan EMI calculator for floating-rate loans. Floating Rate Loans are loans with fixed interest rates and vary based on benchmarks decided as per loan agreement. To calculate the EMI of floating-rate loans, you should consider two opposite scenarios.

In the optimistic scenario, you can consider the interest rates to go down by 2-3%. It would result in lower EMI payments, or you may opt for short loan tenure. In the pessimistic scenario, you can consider the opposite. Such analysis would help you plan future possibilities and prepare for the worst-case scenario.

The EMI calculator lets you try different combinations with different interest rates, loan amounts, and several tenures is what makes them so user-friendly. It helps you make an informed financial decision and forms a solid repayment strategy you can follow once the bank grants your home loan.

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