Home Loan EMI Calculator Jun 2017

Factors affecting Home loan EMI

• Loan amount – Higher the home loan amount, higher will be the EMI
• Rate of interest – Lower the home loan interest rate, lower the EMI
• Loan Tenure –Longer the home loan tenure, lower the EMI. Longest loan tenure available across banks in India is 30 years, subject to borrower’s current age and retirement age. For a home loan at 8.85% interest rate, the EMI per Rs. one lakh loan amount is as below:

Loan Tenure	15 years	20 years	25 years	30 years
EMI amount for loan amount Rs. 1 lakh at 8.85%	Rs. 1,005	Rs. 890	Rs. 829	Rs. 794
Total amount you pay back to the bank including principal and interest	Rs. 180,965	Rs. 213,624	Rs. 248,685	Rs. 285,786
Interest you have to pay over loan tenure	Rs. 80,965	Rs. 113,624	Rs. 148,685	Rs. 185,786

What are the different ways of paying home loan EMI?

• The most convenient way of paying a home loan EMI is by way of ECS mandate in favour of the bank from whom the home loan has been availed
• Note that it is not necessary to hold a bank account with the same bank. One can issue a ECS mandate from one’s salary account or normal bank account
• Key benefit of paying EMI through ECS is that there is no risk of cheque bouncing due to signature mismatch or any technical issue
• Other modes can include post dated cheques and payments by demand drafts, though these are rarely used nowadays

How is Home Loan EMI calculated?

• Home Loan EMI Calculator uses combination of loan amount, loan tenure and interest rate to calculate home loan EMI instantly online
• What’s more, it also tells you how much interest you would pay over the life of the loan. Longer the loan tenure, more the proportion of interest for same loan amount and interest rate

Is the home loan EMI fixed or can it change in future?

Here are some situations in which your EMI can change:

• In case the floating rate of interest on your home loan increases, your bank will typically keep the EMI constant but increase the loan tenure. So, you will pay the same EMI but for a longer duration. However, in case the interest rates increase to an extent that the revised loan tenure is more than the maximum permissible by your bank, the bank may increase your EMI amount.
• For partly disbursed loans availed under tranched EMI scheme, your loan EMI will increase with each disbursement.
• When you make a prepayment of your loan, you can opt to either reduce the EMI and keep the loan tenure unchanged or keep the EMI unchanged and reduce the loan tenure. It is more beneficial to keep the EMI same and reduce the loan tenure. However, you may opt to reduce the EMI in case you so desire.
• Any other situations as per terms and conditions of the loan agreement.

What is a pre-EMI on a home loan and how is it different from regular EMI?

In a pre-EMI interest scheme, bank offers the home loan borrower an option to pay only monthly interest on the loan disbursed till the completion of the property. In this case, the principal The EMIs (which consists of the interest component and principal repayment) on the loan commences only after the loan gets disbursed completely. Since no principal is being repaid, the pre EMI amount is always less than the EMI

Benefits of Pre-EMI:

• A pre EMI option helps manage immediate cash outgo when the property is under construction. This is particularly helpful when the home loan borrower is staying on rent and may not be able to afford both rent and EMI at the same time. E.g., on a 20 year Rs. 25 lakhs home loan at 8.85%, the EMI comes to Rs. 21,459 while the pre EMI will be only Rs. 17,396
• Income tax rebate on principal repayment under section 80-C is available only post completion of the property. So, the principal component repaid on EMI in case of the full EMI option during construction phase is not eligible for any income tax rebate. Under pre EMI option, principal repayment will start only after construction is completed. Hence, the entire principal repayment will be available for rebate under income tax subject to overall cap under Section 80-C
• Interest is payable only on the disbursed loan amount. As a comparison, EMI may be calculated on the entire sanctioned loan amount and hence may impose a burden on the borrower

Considerations of Pre-EMI:

• Loan gets paid off over a longer period. So, borrower carries debt for a longer period of time.
• Income tax rebate on principal repayment under section 80-C is available only post completion of the property. So, the principal component repaid on EMI in case of the full EMI option during construction phase is not eligible for any income tax rebate. Under pre EMI option, principal repayment will start only after construction is completed. Hence, the entire principal repayment will be available for rebate under income tax subject to overall cap under Section 80-C.
• Longer tenure means you pay more absolute interest amount to the bank even at the same rate of interest.

There is another option that some banks offer and which many borrowers find attractive. This is called the tranched EMI option. Under the tranched EMI option, borrower pays EMI on the disbursed loan amount and not on the sanctioned loan amount. The EMI changes with each home loan disbursement and eventually comes to the full amount on final disbursement. In this case, principal repayment starts in the first month itself but is linked to the actual disbursement. The borrower pays less than the full EMI but more than the pre-EMI.