How to calculate home loan EMI
The home loan is most common among the generation, with this the dream of owning a house or building a home of owns choice and design is fulfilled. Home loans help young people to build their own home with the hope of clearing the loan with the Consistent income their well-paid job. While taking the loan, everyone will search for all the available offers from different banks and take the loan from the bank which provides good features and less interest rate. But very few understand and know how to calculate the home loan EMI depending on the type of the loan and the time within which you wanted to clear the loan. Remember that the longer the duration of the loan, the higher will be the total interest that will be paid on the total loan amount.
In this article we will discuss the method and the formula of how to calculate home loan EMI.
EMI stands for Equated monthly instalments. This means from the total amount of loan you have taken, you will pay a small constant amount every month for a specific period to clear the complete loan including the interest amount. This means paying the Monthly instalment for a few years your total debt will be cleared(considering you only have a home loan as debt with no other debt).
For calculation of home loan EMI you need the following details
- Total loan amount
- The interest rate specified by the bank or the financial institute from which you have taken the loan
- Loan Period(time within which you wanted to clear the loan, or the time for which you will continue to pay the EMI) The shorter the duration, the longer will be the monthly instalment and the lower will be the interest paid on the total loan amount. The longer the loan period, the smaller will be the monthly instalment but the higher will be the total interest that will be paid on the total instalment.
The formula for calculation of EMI is as follows
EMI = A/B
A = [(L*I)*(1+I)^N]
B = [{(1+I)^N}-1]
Where
- L stands for Total Loan Amount
- I stands for Interest rate(Interest rate per annum divided by 12)
- N = loan period in months
The EMI which you will be getting from the about equation, that amount you have to pay during the loan period to complete your loan debt. You can directly use the below excel file to calculate the EMI Amount.
EMI calculators of different banks
The below tables lists the EMI calculators of different banks which you can use based on the bank from which you are planning to take home or already taken a loan. The interest is different for different banks and it will be helpful if you use the calculator from the bank from which you have taken the loan.
