Understanding EMI and Interest Rate on Home Loan Finance

In order to tide over home loan repayment tenor, borrowers must calculate their EMI amounts and make robust repayment planning. Making necessary computation beforehand enables borrowers to make an apprised decision regarding how much EMI amount they can afford to bear. 

Process to calculate home loan EMI based on interest rate

The most convenient way to compute home loan EMI is to use a home loan interest calculator. The easy accessibility of home loan interest calculator helps borrowers compute payable EMI, facilitating effective financial planning. 

Here are a few steps that will guide one in evaluating home loan EMI based on lending rates:

Step 1: Go to a lender’s website and click on ‘home loan EMI calculator’. 

Step 2: Enter a loan amount. One can also use sliders to set the figures.

Step 3: Provide loan tenor and interest rate.

On entering these three variables, borrowers can view the home loan EMI amount, interest amount, and total amount payable. 

The mathematical formula based on which home loan EMI calculator is. 

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

Here P refers to principal amount, R denotes interest rate and N is loan tenor.

A home loan interest rate is directly proportional to EMI liability. The higher the interest rate, the higher will be EMI pay-outs. To opt for loan options based on affordability of EMI amount, borrowers must use a home loan interest calculator.