# How to Use Home Loan EMI Calculator

By Finserv MARKETS - Aug 8,2019

Everyone plans to buy a new house at some point in life. Availing a home loan to purchase your dream house is one of the best options. This way, you don’t have to drain your lifetime of savings. However, repaying a home loan can be financially burdensome.

Hence, most banking institutes and other financial sources allow you to repay your home loan amount in Equated Monthly Instalments (EMIs). With these easy EMIs, you can repay your loan amount in parts over a specified tenure. This thus does not impact your financial stability and future plans.

## What Is EMI?

Equated Monthly Installment (EMI) is the amount you pay every month to a bank or other financial institute from where you have taken the loan. You have to continue paying these EMIs until the complete loan amount is paid off.

Your EMI amount will consist of the principal loan amount along with the interest paid on it. The sum interest amount and the principal loan amount is divided by the tenure (the time period in which the loan has to be repaid). The interest amount in your EMI will be larger at the start of the tenure and will gradually decrease with each payment.

Although the monthly EMI amount will not change, the proportion of principal loan amount and the interest amount will change over time. After every successful transaction, you will pay more towards your principal amount and less towards the interest charged.

Here is how EMI is calculated as,

EMI = [Principal Amount x Interest Rate x (1+Interest Rate) ^ Number of Monthly Installments] / [(1+ Interest Rate) ^ Number of Monthly Installments – 1]

It is highly advisable to calculate EMI amounts for different combinations of the principal amount, interest rates and the loan tenure. To make the calculation easier for you, many lenders offer home loan EMI calculator tool. The home loan calculator tools make calculating EMIs easy and give you results within seconds.

Here’s how to use home loan EMI calculator.

## Home Loan EMI Calculator – How to Use?

The Home Loan EMI Calculator tool is very easy to understand and can quickly calculate different EMI amounts for different combinations. This tool can be used for calculating EMIs on your home loan, personal loan, education loans and more.

When calculating EMI amounts for your home loan, enter the following data:

• The principal loan amount that you plan to avail

• Loan tenure – either in months or years

• Rate of interest – in percentage

Once you are done entering the data, the tool will instantly generate the EMI amount that you have to pay for the given home loan amount.

## Floating Rate EMI Calculation

Before you apply for a home loan, it is recommended to calculate the floating rate EMI. This can be done by considering two opposite scenarios – optimistic (deflationary) and pessimistic (inflationary).

As a matter of fact, the loan amount and loan tenure are two components that are controlled by you. But since different lenders charge different interest rates, as an applicant you have to consider two extreme possibilities. Depending on the increase or decrease in the rate of interest, you have to calculate your EMI amount.

This will help you determine how much EMI you can afford, how long should your loan tenure be and how much loan amount you should borrow.

## A Final Thought

To secure your financial future and make sure that it is stable, you have to do sound planning. Hence, before you apply for a home loan, it is recommended that you check your EMI affordability. This can be done with the help of an EMI calculator online.

Bajaj Finserv Home Loan EMI Calculator tool by Finserv MARKETS allows you to calculate the EMI amount that you would be paying towards your home loan. Thus, helping you make an informed decision before you make a commitment.

Finserv MARKETS, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and exclusive EMI store, all under one roof- anytime, anywhere!