All you need to know about a Home loan EMI calculator

All you need to know about a Home loan EMI calculator

A home loan is an essential loan product for a customer who decides to purchase a home but does not have the sufficient funding to do so. A home loan is a specific amount which is borrowed by a customer for a tenure which is fixed from a financial institution to buy, construct or renovate a residential property. The financial institution will charge an interest on the amount borrowed by the customer, which a customer will have to pay along with the principal amount. The cost of purchasing and building a home is high, and a customer may not have sufficient amount of funding for carrying out this plan. In such situations, a customer will be able to avail a housing loan for building a home. Customers can opt for a home loan from banking or non-banking financial institutions.

A home loan is a secured loan, which means a customer will have to provide an asset as collateral to the financial institution. Some financial institutions also consider the home property that a customer wants to buy as the collateral, but an existing property can also be used as collateral. Interest rates offered on the home loans are generally low compared to the unsecured loans. The repayment of a loan is done through equated monthly instalments (EMIs). A customer can use the home loan calculator for calculating the EMI amounts.

What is an Equated Monthly Instalment?

An equated monthly instalment is a payment of a fixed amount which is made by a customer to the financial institution at a pre-fixed date every month. These monthly instalments are used to pay off the interest and principal ever month so over a number of years, the loan is completely paid off. The EMI amount is decided during the sanctioning of the loan and the amount of EMI is decided based on the income and the credit history of the customer. A lot of financial institutions offer the option of a pre-EMI payment option, these are offered to customers who purchase a property that is under construction. A lot of financial institutions have provided a home loan EMI calculator on their official websites. They are easy to use and provide accurate results to the customers.

A home loan EMI calculator is one of the easiest ways of calculating the EMI amount. These calculators provide the most precise and accurate results helping a customer get an idea about the amount they will have to pay every month.

How does a home loan EMI calculator work?

The formula for calculating an EMI is –

Emi + (P*r(1+r)n[(1+r)n-1]

P – principal or loan amount

R – rate of interest

N – Number of monthly instalments or loan tenure in months


Suppose a customer borrows a home loan amount of Rs 3,500,000 (Principal amount) from a financial institution. The interest rate (R) with loan stands at 8.65%. The loan tenure is 360 months or 30 years.

After using the home loan EMI calculator with the given information, the monthly instalment amount comes up to Rs 27,285.

Thus, EMI paid every month = 27,285

EMI amount for the year = 327,419.