Monthly EMI = PMT (Monthly Interest Rate, Tenure in Months, Loan Amount) We use the excel formula PMT to calculate home loan EMI. Suppose you take a home loan of Rs 50 lakh for 25 years at 8%. And in turn, the lower will be the monthly EMI. The bigger the downpayment, the lower will be the loan amount. Down payment amount: This is an indirect factor.Loan interest rate: Higher the interest rate of a loan, the higher will be your EMI.Repayment tenure: Longer the loan tenure, the lower will be your loan EMI.Loan amount: Higher the loan amount, the higher the EMI.And in the later years of the loan tenure, the EMIs contribute more towards repayment of the loan principal.Īnd what are the factors that impact EMI? But the initial EMIs contribute more towards the interest component of the loan. The EMI amount is fixed for the full tenure. Or to put it simply, a part of the home loan EMI goes towards interest payment while the other part is used to reduce the outstanding loan principal. The EMI is made up of 2 parts: i) principal amount being repaid and ii) accrued interest. If something is unaffordable for you as of now, you can purchase it by taking a loan and repaying back in smaller EMIs over a period of time. The best part about EMI is that you get to repay back the loan in small parts which are easier for most salaried individuals. It’s a monthly payment that the borrower makes towards repayment of the home loan. How Home Loan EMI works?ĮMI stands for Equated Monthly Installment. Wrong! It’s on the contrary quite easy.Īnd once you understand how EMI works, you will be in a better position to understand how changing the variables like principal, loan interest rate and tenure results in changing the monthly EMIs. Many people think that EMI calculations are tough and even if they tried, they won’t be able to figure things out. In this post, we discuss how to calculate home loan EMI yourself and also provide you with Free Excel-based Home Loan EMI Calculator (Free download) The banks will no doubt be willing to tell you the EMI you need to service, but it’s in your interest to understand the calculation of home loan EMIs Right? So you should understand how to calculate EMI on home loan correctly even if you have to use a loan EMI calculator in excel or otherwise. At least for the vast majority of people who aren’t into business requiring business loans. So you are looking for Home Loan EMI Calculator (Free Excel sheet download) for the year 2023?Ī home loan is probably the biggest loan you will ever take in your life.
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