How to calculate the EMIs for a home loan of ₹20 lakhs?

Home loan EMIs depend on three basic factors, i.e the loan amount, interest rate, and the tenure of the loan. Several banks in India offer home loans at attractive interest rates. In fact, home loans usually involve the lowest interest rates given as they are secured loans. Equated monthly instalments (EMIs) on home loans can be calculated easily using online tools, and these tools can help forecast your home loan EMIs accurately.  Let’s determine the EMI for a ₹20 lakhs home loan.

Understanding how home loan EMI calculation works
 

Before proceeding with the calculation of ₹20 lakh home loan EMI, you need to understand how to calculate home loan EMIs. The calculation involves a few variables like the home loan interest rate, total loan amount, and loan tenure. Banks in India offer considerable loan amounts at affordable interest rates.

For instance, IDFC FIRST Bank is among the top banks offering home loans of up to ₹5 crores with a completely digital process. Moreover, you get competitive interest rates and extended tenures of up to 30 years to repay your loans conveniently. Depending on the tenure, you can expect higher or lower EMIs.

Coming back to the calculation, you can either calculate your EMI manually or use an online home loan EMI calculator to precisely determine your home loan EMIs. Once you have gathered information like the interest offered, the total approved loan amount, and your preferred tenure, you can conveniently compute the EMI using the online or offline method.

How to calculate EMI on ₹20 lakh home loan?
 

For calculating the home loan EMI on ₹20 lakh financing, you already have the principal loan amount (₹20 lakhs), now suppose you get an interest rate of 10% per annum for a tenure of 30 years, you can use the following mathematical expression.

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

In this equation,

P = Principal loan amount
N = Loan tenure in months
R = Monthly interest rate

The rate of interest (R) on your loan is calculated per month.

R = Annual Rate of interest/12/100

Putting the amounts in the formula, you get the EMI to be around ₹17,500 per month.

Note that the amount is not exact as various charges such as processing fees and administration fees are later added to your loan amounts that alter the exact home loan EMI. However, this gives you a precise idea of how much you may need to pay when planning a home loan. You can use this method to calculate ₹10 lakh home loan EMI or ₹30 lakh home loan EMI payments too.

How to use an online home loan EMI calculator?
 

To avoid any errors with manual calculations, it is advisable to use an online home loan EMI calculation tool. Here is how to use it.

• Go to the home loan EMI calculator.
• Choose the principal home loan amount by adjusting the slider.
• Select the loan tenure by moving the slider from left to right.
• Similarly, set the interest rate offered.
• Your monthly EMIs will appear in the result tab.

Adjust the sliders to find the most convenient home loan EMI option as per your financial requirements.

Purchasing your dream home requires huge capital investment and home loans are the most viable solution. However, you need to plan your home financing and do research for an affordable deal. A home loan EMI calculator can help you with financial planning according to your income and forecast the amount you need to pay on a monthly basis.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.