How to Calculate Home Loan EMI: A Guide
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The process of preparing for a home loan doesn’t start at the home loan application, it starts at the very foundation – namely, research, EMI forecasting, and planning a tentative repayment schedule. Your home loan is a long-term financial commitment, and the EMI you commit to has to be paid on time, without any delays, or default. Hence, chalking out your potential EMIs is what you should pay keen attention to. 
 
Home Loan EMI Calculators are easily available online and help you compute your EMIs, based on the data you input. They make it easier to plan your repayment schedule. This is also of help if you would like to transfer your home loan balance to a new lender and want to know what EMI would be most aligned to your financial requirements. 
 
Smart Ways to Calculate Home Loan EMI
 
1. Finalize Your Desired Home Loan Amount 
 
The first step to plan your repayment schedule is to determine how much funding you will need from your lender, based on which your EMIs will be calculated. An applicant with a strong financial profile who can meet the eligibility criteria as mandated, will typically get a sizeable loan. 
 
Besides, the size of the home loan is also based on the value of the property you want to buy.  Lenders offer nearly 70% to 90% of the property value as the loan, based on regulatory guidelines. You have to arrange the difference, as your down payment. 
 
Even though your final loan amount is decided after several rounds of negotiations with your lender, it is advisable to draft your own plan before approaching them. If you’re looking for a sizeable loan, you can consider borrowing from Bajaj Housing Finance Limited, whose attractive home loan benefits include a sanction of Rs.5 Crore* or more based on eligibility, at competitive interest rates. 
 
2. Select the Right Loan Tenor 
 
Right after you’ve decided how much funding you will require from the lender, it is time to fix the loan tenor, or the period over which you will repay the loan. There are several considerations to be taken into account, such as your age at the time of borrowing, your EMI to income ratio, and your financial profile. 
 
Generally, lenders expect loan repayment to be completed by the time the borrower reaches the age of 62 years or retirement age. The younger the applicant, the longer would be the repayment tenor. An applicant who is nearing retirement can consider getting a co-applicant to enhance their eligibility in order to get a longer repayment tenor. 
 
Lenders also prefer that a borrower’s cumulative EMIs, for all the loans, does not exceed 50% of their net monthly income. If you already have a substantial debt obligation, this could impact the size of your EMI and loan tenor. 
 
3. Bag the Best Interest Rate 
 
Lastly, but most importantly – the interest rate at which you need to service your loan decides the length of your repayment period. Lenders, such as Bajaj Housing Finance Limited are willing to offer nominal interest rates, starting as low at 6.70%* to salaried applicants with a strong repayment capacity. If you are eligible for such reasonable lending rates, you can save considerably on your EMI outflow, over the tenor of your loan. 
 
Applicants must also decide what kind of interest rate they’d prefer – fixed or floating, before finalising their loan. By opting for a fixed interest rate, you remain unaffected by interest rate volatility and enjoy a fixed interest all through. The floating interest rate is typically linked to the company’s internal reference rate or external benchmark linked rate (RBI’s repo rate) and is sensitive to market conditions which can help to get benefit of lower interest rate cycle as well. 
 
How to Calculate Home Loan EMI
 
Using a Home Loan Calculator helps in computing your possible home loan EMIs with ease. The Bajaj Housing Finance Home Loan Calculator is a free and easy-to-use digital tool that allows borrowers to adjust their loan amount, loan tenor, and interest rate to get corresponding EMI and interest payable. Doing this before you approach a lender gives you an insight into the feasibility of your home loan ask. 
 
Those who want to do the calculations on MS Excel can use the following formula to calculate the expected EMI:
 
PMT (RATE, NPER,PV,FV,TYPE)
 
Where:
 
RATE is the interest rate offered by the lender divided by 12
NPER is the number of EMIs
PV stands for principal amount
Remember to set both the values of FV and TYPE to 0 (zero). 
 
Home Loan Eligibility Details
 
It is important to check your home loan eligibility criteria, so you can maximize the chances of home loan approval. The Bajaj Housing Finance Limited criteria vary based on employment type but retain its no-fuss nature, all through. 
 
 
The Final Word
Now that you’re convinced of the efficiency of the Home Loan EMI Calculator, here’s why you should use the Bajaj Housing Finance home loan EMI calculator to help in your EMI computation. 
 
  • Saves the trouble of error-prone manual calculations
  • Permits comparing home loan rates
  • Helps plan finances better
  • Enables to consider other loans along with the new one and manage them better.
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