July 19, 2024

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EMI Calculator – Calculate EMI on Home Loans and Process

3 min read
EMI calculator


When you avail a home loan, you would want to ensure that the EMI is affordable so that the repayment is easy. While the lenders decide the EMI, you can compute the same and know the exact amount payable beforehand by using the EMI calculator. Read on to know more about this tool.

When you discuss home loans, you may invariably talk about EMI or Equated Monthly Instalment. It is the amount that you repay the lender every month against the amount you borrow till the end of the loan tenure or till you repay the full amount. The EMI amount includes both the principal amount and the interest amount and the lender fixes this amount at the time of availing the loan.

The lenders compute the EMI amount payable by the borrower based on three critical factors – the borrower’s income profile, the amount borrowed and the loan tenure. As a borrower, you must know the EMI beforehand so that you can plan your finances accordingly and repay the amount without any hassles till the end of the tenure. This where the home loan EMI calculator, an online tool plays an important role.

What is a home loan EMI calculator?

An EMI calculator is an online that allows you to compute the home loan EMI amount you must pay to the lender every month. Today, most of the financial organisations offer online services, they have an EMI calculator on their website.

It is an easy-to-use tool wherein you must enter the loan-related details like the amount you want to borrow, the interest charged by the lender, and the loan tenure. Based on the input you provide the calculator will automatically compute the EMI and show you the exact amount within a few seconds.

The calculator also allows you to know the exact break-up of the EMI amount, including the total interest payable throughout the tenure, the principal amount payable and the processing fee.

How does the EMI calculator work?

The EMI calculators on major of the reputed lender’s website, use the following formula to compute the EMI.

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

Here, in the above formula, P is the principal amount (i.e. the loan amount approved by the lender), R is the interest rate levied by the lender and N is the loan tenure (i.e. the repayment duration).

You can easily change the P, R, N input multiple times and try different combinations so that the EMI is affordable. This implies that the principal amount, the duration and the interest rate are variables and when you change their value, the EMI amount will vary accordingly.

Benefits of Using Home Loan EMI Calculator

  • Purchasing a new home is an important financial decision. Since it is a big investment, you must plan the finances well so that you can easily repay the amount without compensating on your other financial goals. And, since the EMI calculator allows you to know the EMI beforehand for the amount you wish to borrow, you can decide the maximum amount you can afford to borrow so that the repayment does not become a burden.
  • By knowing the exact EMI payable every month, you can plan your budget accordingly and make necessary financial arrangements and avoid the risk of default on payment.
  • The EMI calculator provides accurate results instantly. Thus, it helps you avoid the hassles of manual calculations.
  • The home loan EMI calculator is a free tool and you can use it anytime and from anywhere you want as per your convenience.

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