Home loan

How to Calculate Your EMI Home Loan Through Different Methods

After researching and exploring many different types of homes, when you have finally found your dream home, the next step is to figure out the finances. Home loans are designed to provide financial assistance to people for the purchase of their dream home. Banks offer a loan amount equivalent to 80% of the property price.

The loan amount is repaid in simple monthly installments to the bank as an EMI home loan. Assimilated Monthly Installments (EMI) include the loan amount plus interest on the loan amount. There are different methods to calculate the EMI of home loans. Read the blog for more!!

Factors that influence the calculation of EMI for home loans

Before applying for a home loan, you must check your eligibility online on the home loan eligibility calculator. The applicant must enter information into the home loan eligibility calculator, such as income, employment status, etc. The calculator will evaluate the information and display the eligibility status accordingly.

Once you qualify for the home loan, then you need to be aware of the factors that influence the home loan EMI calculation –

  • Rising – The amount of the loan is generally 80% of the price of the real estate financed by the banks or financial institutions.
  • Mandate – The duration of the Housing Loan also influences the EMI.
  • Interest rate – This factor is one of the most influential factors in any loan. Applicants applying for loans always explore and look for lending institutions that offer lower interest rates on loans.

EMI Calculation Methods for Home Loans

There are different methods to choose from to calculate the EMI of home loans on their own –

1. Manual use of the formula

The first and simplest method of calculating the EMI of home loans is a manual calculation using the compound interest formula. You will just have to simply enter the values ​​into the formula and solve the equation. The formula to calculate the EMI of the home loan is (P*R*(1+R)^N)/(1+R)^N -1)

2. Microsoft Excel

In case one does not like math or solving equations, the second option to calculate the EMI of the home loan is to use an Excel sheet. An Excel sheet can solve complex equations in seconds, with precise answers. Use the PMT Fx function and enter the principal, time and interest rate, then click enter. The home loan EMI will be visible on the screen.

3. Online EMI Calculator

The online EMI Calculator is one of the easiest and fastest EMI calculation methods for home loans. Enter details like amount, time and interest rate. The online EMI calculator will instantly display the EMI values. The user can also adjust the details before applying for a loan.

Conclusion

Home loan IMEs should be carefully planned to ensure that you don’t end up in a financial burden. Choosing the bank that offers the lowest interest rate along with other perks and benefits will help you navigate your loan term smoothly. Therefore, calculate your EMI values, analyze them according to your financial capacity, compare them thoroughly and then choose.


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