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Borrowers need to be aware of their monthly obligations while taking a home loan. It will help them understand whether the EMI payable is within their monthly repayment capacity. After knowing the amount, they can also make the necessary financial planning. 

Home loans are long-term advances where the repayment tenure may stretch up to 25-30 years. Making repayments for such long periods require substantial planning on part of the borrower so as to reduce chances of defaulting. Defaulting of loan repayments also diminishes the credibility of a borrower and increases the probability of rejection of loan applications in future. As such, calculating EMIs in advance becomes imperative.

Individuals can calculate EMIs both manually and using an online home loan EMI calculator. Following are the ways how they can calculate EMI for a home loan of Rs. 30 Lakhs. 

Procedure to Calculate EMI for a Home Loan of Rs. 30 Lakhs Manually

To calculate the EMI amount manually, individuals need to use the mathematical formula for instalments. Following is the formula:

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

Here 'P' denotes the loan amount, 'R' refers to the interest rate, and 'N' indicates the repayment period. So, individuals must be aware of these three variable inputs while calculating the instalment amount. 

Individuals need to confirm the applicable interest rate from their preferred lending institution before proceeding with the calculation. 

Let's assume that the home loan interest rate is 8% and the tenure is 20 years. To compute the Rs. 30 lakh home loan EMI, borrowers can use the above-mentioned mathematical equation where,

P is the loan principal which is Rs. 30 Lakhs

R is the rate of interest which is 8%, and

N is the number of years which is 20.

Upon filling in the values and computing, the resulting EMI would be Rs. 25,093. 

If the interest rate and repayment period is altered, the instalment amount would also change accordingly. Borrowers will have to engage in the lengthy calculation process everytime they try to adjust any of the figures. On the other hand, using an online calculator will reduce the chances of manual errors.

Procedure to Calculate the EMI Amount Using an Online Calculator

Before knowing how to calculate EMI using a home loan EMI calculator, individuals need to be aware of this tool. It is generally a computerised programme integrated with the mathematical formula of instalment. 

Most financial institutions provide this tool on their websites to help customers find out a suitable repayment period. Customers just need to enter three variables - interest rate offered, tenure and loan amount in the input boxes of the calculator.

Following is the stepwise process to calculate EMI for a home loan of Rs. 30 lakh:

Step 1: Log in to the website of your preferred lending institution and navigate to the EMI calculator page.

Step 2: Enter the interest rate, loan amount (Rs. 30 Lakhs), and your preferred loan tenure. 

The tool will compute and display the EMI amount and total payable interest against the entered tenure.

So, calculating EMIs using the home loan EMI calculator is straightforward. There are also several other benefits that borrowers can leverage. 

Benefits of Using a Home Loan EMI Calculator

Following are some advantages that one can attain by using this online tool:

  • Understanding total interest outgo

A home loan EMI calculator also displays the amount of interest outgo. It can help borrowers measure and compare the costs of different loan offers. This way, they will be able to choose lending institutions which will keep their borrowing costs at a minimum. 

  • Choosing a suitable tenure

The repayment tenure significantly influences the instalment amount. If borrowers choose a shorter repayment period, their EMI amount escalates. It may become difficult to repay.

On the other hand, when they choose a longer repayment period, they need to pay more towards the interest. Using this calculator, they can adjust the tenure until they reach an instalment amount thin is within budget.

  • Improving CIBIL score

Making home loan repayments in a timely manner improves the CIBIL score. An improved score increases chances of availing future loans. Contrarily, the chances of rejection increases in case of a default. Knowing the EMI amount beforehand lets borrowers plan the repayment in a way that there are minimum chances of defaulting. 

The illustrated procedures to calculate EMI for a home loan of Rs. 30 Lakhs can significantly help new borrowers understand their monthly liabilities and choose a comfortable tenure. The calculator helps borrowers plan out their debt repayment and repay dues on time. Timely repayment comes with its own set of benefits for the borrowers.

Disclaimer: This article is a paid publication and does not have journalistic/editorial involvement of Hindustan Times. Hindustan Times does not endorse/subscribe to the content(s) of the article/advertisement and/or view(s) expressed herein. Hindustan Times shall not in any manner, be responsible and/or liable in any manner whatsoever for all that is stated in the article and/or also with regard to the view(s), opinion(s), announcement(s), declaration(s), affirmation(s) etc., stated/featured in the same.

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