EMI Calculation: Learn how much monthly installment of home loan will be made, and how to save

News India Live, Digital Desk: Emi calculation: Buying a house is everyone’s dream, and a home loan is a huge support to fulfill this dream. But while taking a home loan, the biggest question that comes to our mind is ‘how much EMI will be made?’ EMI (Equated Monthly Installment) i.e. how much money you will have to pay for the bank every month is very important to know, because this affects the budget of your month.

This is not just a mathematics, but part of your future financial plan. According to an article by HR Breaking News, let’s understand how your EMI is decided while taking a home loan, and some examples know how much EMI can be made.

What does EMI depend on?

Your EMI mainly depends on three things:

1. Principal Amount: How much money you are taking from the bank. The higher the amount, the more EMI.

2. Interest Rate: How much interest is the bank charging you on the loan. EMI will also be higher when the interest rate is high.

3. Tenure/Loan Period: How many years do you want to repay the loan. The longer the duration, the lower the EMI, the less, but the total interest will be paid more. At the same time, EMI will be more when the period is short, but the total interest will have to be repaid.

Understand your EMI (Example: Home Loan of ₹ 50 Lakh):

Suppose you have a home of ₹ 50 lakh Loan Has taken Let’s calculate EMI on various interest rates and periods:

Example 1: at an interest rate of 8.50%

• For a period of 20 years:

  • EMI: ₹ 43,391

  • Total interest: ₹ 54,13,840 (more than loan amount!)

  • Total Payment: ₹ 1,04,13,840 rupees

• For a period of 15 years:

  • EMI: ₹ 49,271 rupees

    
    

  • Total interest: ₹ 38,68,760 rupees

  • Total Payment: ₹ 88,68,760

• For a period of 10 years:

  • EMI: ₹ 61,905 rupees

  • Total interest: ₹ 24,28,600 rupees

  • Total Payment: ₹ 74,28,600 rupees

What do you learn from these examples?

• Duration game: You can see that EMI increases when the loan duration is reduced, but the interest paid overall is very low. The total difference of total interest in 20 years vs. 10 years is about ₹ 30 lakhs!

• Importance of interest rate: Even if the interest rate makes a difference of half percent, it can make a difference of millions of rupees in the long term.

Some important things while taking a loan:

• Assess your ability: Keep EMI as much as you can easily pay every month. More than 30-40% of your total monthly income should not go to EMI.

• Consider pre-payment: Whenever there is extra money, prepare some part of the loan. This may reduce your EMI or reduce the loan duration, and will save interest.

• Use EMI calculator: There are many EMI calculators available on the bank’s website or online, using which you can calculate your possible EMI yourself.

Home loan is a long commitment, so do research well before taking it, assess your financial situation and understand all aspects. A perfect EMI will help fulfill your home dream without any stress.

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