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How to calculate EMI for a home loan?

The bank may promise for no hidden charges whenever you go for a loan. But, is it really? Have you ever verified that? I mean that the EMI which you have to deposit every month for a time period for your loan is not clubbed with any hidden charges. Do you know how to calculate the EMI? Hope you may be sure of that.

Now you must have the question that how you will do that. Because you do not know how the EMI is derived from? Obviously, why do you know how to calculate EMI for a home loan or personal loan? Basically, when you go for a loan for buying a home or car, different banks provide their different catalogue. You have to pick one of them. Hence, have a look here to know the simple EMI formula


What is EMI?

EMI full form stands for Equated Monthly Instalment. When you borrow a loan from any financial institution, you have to agree to repay it in a number of instalments. And each instalment consists of a portion of the principal as well as the interest. Hence, over a period of years, you will pay off the complete loan with interest.


How to calculate EMI?

EMI formula

in the above EMI formula,

E is EMI
P is Principal Loan Amount
r is the rate of interest calculated on a monthly basis.
(i.e., r = Rate of Annual interest/12/100. If the rate of interest is 9% per annum, then r = 9/12/100=0.0075)
n is loan term /tenure/duration in number of months

For example, if you borrow ₹20,00,000 for your home loan at 9% annual interest for a period of 15 years (i.e., 180 months), then EMI = ₹20,00,000 * 0.0075 * (1 + 0.0075)^180 / ((1 + 0.0075)^180 - 1) = ₹20,285. i.e., you will have to pay ₹20,285 for 180 months to repay the entire loan amount. The total amount payable will be ₹20,285 * 180 = ₹36,51,360 that includes ₹16,51,360 as interest toward the loan.

Bonus Tips:

If you find the above job a tedious one, you can download any EMI calculator from the play store. Moreover, the calculation is a complex one that easily leads to an error. Hence, using the EMI calculator is not only time saving but also its accuracy is unquestionable. You can download the EMI calculator that I personally use as my personal loan EMI calculator or home loan EMI calculator when required by clicking the download button below.

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