A home loan / house loan EMI is a fixed amound paid by a borrower to a lender (banks, financial institutions) on a specified date of every month towards repayment of the home loan taken. EMI consists of principal amount and interest amount, payable every month. Although the EMI payment is fixed every month, the amount of principal and interest paid changes. In the initial years, the interest portion is higher and as the loan amount gets repaid over the years, the interest keeps reducing and the principal repayment amount keeps increasing. Therefore, you end up paying 70-75% interest amount in first half period of loan tenure.
This calculator helps you calculate the EMI by providing the the amount you want to borrow, the duration of the loan, the interest rates.
When taking Equated Monthly Installment there is always an interest associated with based on which it is calculated. This interest comes with two options, i.e. (i) Fixed rate and (ii) Floating rate. The borrower is generally giver the option to choose between the type of rate based on which the EMI has to be calculated.
Flat Rate Home Loan EMI
In Fixed rate EMI interest calculation is much simpler where a standard rate is fixed at the time borrowing of the money and that remains the same throughout the loan period irrespective of the MCLR.
Floating Rate Home Loan EMI
In Floating rate EMI interest rate fluctuates based on the market- lending rate. Market lending rate or otherwise known as Marginal Cost of Lending Rate (MCLR) is based on multiple factors including the repayment ability. The benchmark of MCLR is generally revised regularly by the banks according to the market conditions. Therefore, the EMI reducing balance method is more cost-friendly to borrowers.