How is the EMI calculated on a home loan? – The New Indian Express

If you are considering taking out a home loan, chances are you are looking for various home loan options that best suit your budget and other requirements. Not only does a home help you become a homeowner with convenient repayment ease, it also offers tax benefits associated with home loans.

If you are considering taking out a home loan, the first thing you should do is check the affordability of your desired loan amount by calculating your monthly EMI. By calculating this, you will have answers to questions such as – will you be able to pay the loan and the EMI that will come with it? Will you have to compromise on your necessities to successfully repay IMEs over time? Once you have the answers to these questions, you’ll have a better idea of ​​which home loan plan is right for you.

How to calculate the EMI to be paid on a mortgage?

Home loans are repaid in the form of EMI, which consists of a principal component and an interest component.

The lender will also give you an amortization schedule that will tell you what percentage of each monthly EMI will go toward principal repayment and what percentage will go towards interest repayment. The amortization table will also give you your corresponding balance at the end of each month.

Let’s look at the three components that you will enter into the home loan EMI calculator.

The principal amount

When you apply for a home loan, the lender only finances a certain percentage of the overall cost of the house. For example, if you have your eyes on a house worth Rs.1 Crore, the lender will only sanction 70%-90%* of the total value. You will need to arrange the remaining amount.

When calculating EMIs for home loans, you should only enter the money borrowed and not the overall cost of the home. In this case, if the lender grants you Rs.75 lakh as home loan, the principal amount will be Rs.75 lakh.

Interest rate

So, do you capture the lowest interest rate offered by a lender when calculating your EMI? The interest rate the lender will offer you depends on your credit score, income profile, age, and other factors. So, when calculating EMIs, use the lower interest rate only if you have confirmation from the lender or enter a slightly higher interest rate.

Bajaj Housing Finance, a 100% subsidiary of Bajaj Finance Limited, offers home loans at interest rates starting at 6.65%* per annum for employees and professionals.


Lenders generally allow individuals to repay their mortgage over a term of up to 10 to 30 years. Bajaj Housing Finance allows borrowers to repay their loan over a term of up to 30 years. So, whether you plan to calculate your EMIs manually or using an online home loan EMI calculator, we recommend that you first decide on the term you will opt for.

Use a Home Loan EMI Calculator

Just because we know the formula for calculating EMIs doesn’t mean it’s a good idea to sit down with pen and paper and calculate them manually. The EMI calculation formula is a tricky thing to do and therefore manual calculations are error prone. Also, creating your amortization plan manually will take more time. Therefore, one must use online financial tools, such as a home loan EMI calculatorto understand their monthly EMI obligation and amortization schedule.

Here are the benefits associated with using a home loan EMI calculator.

  • Home loan EMI calculators can be trusted to be accurate every time. They always provide correct results.
  • Your Home Loan EMI Calculator is accurate and fast – you’ll get your monthly EMI and amortization schedule within seconds of entering all the information.
  • Since the online calculator provides results in seconds, you can try as many loan amount, interest rate, and term combinations as you like. Trying these different combinations will allow you to find the ideal combination for you.
  • You can use the home loan calculator to compare different offers from different lenders and choose the one that best suits your budget and needs.
  • EMI home loan calculators are easy to use and free.


A home loan is a huge financial commitment. If you are considering taking out a loan to buy a home, you need to do all the planning ahead of time. This includes knowing your monthly EMIs and making sure you can afford them.

Warning: This content is distributed by Bajaj Finance Ltd. No TNIE Group journalist is involved in the creation of this content.