Home Loan EMI Calculator - Housing Loan EMI Calculator Online India

Home loan calculator — how does it work

A home loan is a financial product designed to help individuals purchase property. In this arrangement, a lender, typically a bank or financial institution, provides funds to the borrower, who agrees to repay the loan in equated monthly instalments (EMIs) over an agreed period.

The property being purchased serves as collateral for the loan, meaning the lender has the right to seize the property if the borrower defaults on repayments. Home loans usually have specific terms, including the loan amount, interest rate, tenure of EMIs and repayment period.

What is a home loan calculator?

A home loan calculator is a tool that helps estimate the monthly payments (EMIs) and total costs associated with a loan. By entering details such as the loan amount, interest rate and tenure, users can quickly see how much they would need to pay each month and the overall cost of the loan over time. This tool is useful for budgeting and comparing different loan options.

What are the advantages of a home loan calculator?

A home loan calculator is important as it helps potential homebuyers estimate their monthly mortgage payments and total loan costs. It simplifies planning by allowing users to input different loan amounts, interest rates, and terms, making it easier to budget and compare loan options. The advantages of a home loan calculator are:

1. Budgeting: The calculator helps users understand how much they can afford to borrow and their monthly financial commitments, ensuring they stay within their means.

2. Comparison: Adding different terms, such as interest rates or loan durations, users can compare the long-term costs of various loan options.

3. Time-saving: The home loan calculator provides detailed payment schedules and cost breakdowns, reducing the need for manual calculations and possible errors.

4. Informed decisions: It clarifies the financial implications of different EMI choices, helping users choose the most suitable loan for their financial situation.

5. Flexibility: Borrowers can experiment with different data, such as down payments and loan terms, to see how they impact the overall loan, aiding in better financial planning.

How home loan EMI is calculated?

The formula to calculate the EMI for a home loan is as follows:

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

E is the EMI amount

P is the principal loan amount

R is the monthly interest rate

N is the loan tenure in months

A home loan EMI calculator uses this formula to determine the exact EMI amount.

Factors determining home loan interest rate

When applying for a home loan, banks and housing finance companies (HFCs) assess the borrower's credit history, repayment capacity, income, and the property being purchased. Key factors influencing eligibility and interest rates include:

1. Credit score: A score of 750+ suggests responsible credit behaviour, often leading to lower interest rates. Maintaining a good credit score is crucial for favourable loan terms.

2. Income and employment: Lenders prefer applicants with stable incomes, especially those employed with government, PSUs, or reputable private organisations, offering them lower interest rates.

3. Loan amount: Smaller loans (up to ₹ 30 lakh) normally come with lower interest rates. Making a larger down payment can reduce the loan amount and lower the interest rate.

Types of home loans

The interest rate on a home loan varies depending on the type of loan. Standard home loans typically have regular interest rates, while loans like plot loans or NRI home loans often come with higher rates. Many lenders offer a slight concession, usually around 0.05%, on interest rates for women borrowers. Married couples are often advised to benefit from taking a joint home loan with the wife as the primary applicant, potentially securing a lower rate. A joint home loan can increase eligibility for a larger loan amount and provide more tax benefits.

How do banks calculate interest rates on home loans?

In India, home loans typically have either floating or fixed interest rates. A fixed rate remains constant throughout the loan tenure, while a floating rate can change. For floating rates, the interest is calculated based on the bank's base rate (standard lending rate), the lender's repo-linked loan rate (RLLR), or the marginal cost of fund-based lending rate (MCLR), plus a spread (the difference between the bank's borrowing and lending rates). Floating rates are adjusted according to changes in the RBI's repo rate, which is the rate at which the regulatory bank lends money to other banks. However, these adjustments occur after a reset period, meaning the interest rate on your EMI may be revised at specific intervals.

Home loan interest rates (as of July 2024)

• Axis Bank: Starts from 8.75% (salaried), 9.10% (self-employed).
• Bandhan Bank: (January-March 2024): 8.50% to 13.30%.
• Canara Bank: 8.40% to 11.75%.
• CSB Bank (Q1 FY 2024-25): 8.75% to 11.50%.
• DCB Bank (Q4 FY 23-24): 9.75% to 15%.
• HDFC Bank: 8.75% to 9.65%.
• ICICI Bank: 9.25% to 10.05%.
• IDBI Bank: 8.45% to 12.25%.
• Indian Overseas Bank: 8.40% to 10.50%.
• Jammu and Kashmir Bank: 8.75% to 9.85%.
• Karnataka Bank: 8.60% to 10.62%.
• Karur Vysya Bank: 9% to 11.05%.
• Kotak Mahindra Bank: 8.70% to 8.75% plus.
• Bank of Baroda: 8.40% to 11.10%.
• Bank of India: 8.40% to 10.85%.
• Bank of Maharashtra: 8.35% to 10.40%.
• Punjab & Sind Bank: 8.55% to 10%.
• State Bank of India (regular home loan): 9.15% to 9.65%.
• Union Bank of India (floating RoI): 8.35% to 10.75%.
• Yes Bank: 9.40% to 11.5%.