Home Loan EMI Calculator Nov, 2018

Planning to buy a home & Take a loan for that. Find out here how much would the EMI be?
Home Loan Amount
No. of Months
Interest Rate
%
Monthly EMI
Total Interest Payable
Total Principal
Total Payment (Principal + Interest)

Introduction

Home Loans

You can take a Home loan 105 times more than the monthly instalment you can pay. Simply means if you can afford to pay around Rs.46000 in EMIs every month for a Home Loan, you can get Home Loan of Rs.50 lacs. They come in all types. They come as Home Improvement Loan, Plot Loan, Housing Loan, among others. So you can go for EMI calculator for home loan.

What is a Home Loan

Oh come on, everybody knows that Home Loan refers to the money you borrow from the Bank (or any other Financial Institution) to purchase/construct a home for yourself.

Whatever is borrowed has to be returned in a particular time frame and whatever is borrowed is borrowed at a cost. Banks define that time frame as TENURE of the loan and it ranges from 2-3 years till about 30 years. Generally nobody borrows for 2 years and very few people go for 30 years. Usually people go for 20 years.

Banks charge you some interest. After all everybody loves to get some interest on the money they lend. Even you do. Isn’t it? That interest is dependent on many factors currently it is around 9.3-9.5%. It depends on factors like if you are a women salaried borrower or a self-employed person engaged in some business.

Why to take a Home Loan:

Home Loans are required to create an asset for yourself (a home) that is otherwise far from reach by accumulating money for purchasing it outright.

What is an EMI:

Now Banks have a very funny but correct way of calculating how much exactly you have to pay them back. And it should be simple for you as well. So they kept it simple. They said that you should pay SAME AMOUNT every month so that it is easier for you to follow. This is called EMI – EQUATED MONTHLY INSTALMENT. EQUATED because it is EQUAL/SAME every month. MONTHLY because you have to pay MONTHLY. INSTALMENT – I am sure what it stands for. What is simple in the foreground has to be complex in the background. EMI is made of Principal component & an interest component calculated monthly. Every EMI (mind it – there are 240 EMIs in a 20 year loan) has different principal & different interest component every month. The principal component increases every month & the interest component decreases every month. But both put together result in same EMI every month. Don’t be a hero – use PMT function in excel to compute it.

Reducing Balance:

It is a term used but not understood well. It is also very simple. It means that banks will charge interest on the loan amount outstanding. Remember we told you about EMI made of principal component and interest component. Well the principal component that the Bank recovers every month from your EMI reduced the loan amount outstanding. The next month’s interest is levied on that and hence the name Reducing Balance. Some people don’t understand this so they do it in a simple way. Total all the EMIs they have to pay, subtract the principal from that –they get the interest portion. This interest portion they divide the loan tenure (in years). The result which they get – they divide by loan amount & they get an interest rate. If you wouldn’t have already guessed, the interest rate so arrived is less than the actual loan rate. Why? That’s another story – it’s because Banks take money from you every month. So what? Forget it!!

The need for this Home Loan EMI Calculator

Financial Calculations are not so easy to understand. Even though the EMI Calculator is the most basic one, still it is a struggle sometimes to understand the same. We thought why not make a calculator that helps you easily to determine what you have to pay as home loan EMI every month for a particular loan amount for a particular tenure of home loan. That’s it. The rest is done by the EMI calculator for home loan.

How to use this calculator

Just going through the formalities, I will now tell you how to use this Home loan calculator.

HOME LOAN AMOUNT: Put in the amount of Home Loan you are looking to take. Please remember that always take about 70-75% of the market value of the house you have in mind. This is what generally Banks lend you.

NO. OF MONTHS: Here you select the tenure of the loan you feel is comfortable for you – 60 months (5 years) or 240 months (20 years). We have put the default value at 20 years which is what mostly the applicants go for as repayment term whenever they are taking a home loan. People generally try going in for longer tenures. Well that seems easy but burns a huge hole in your pocket. On a Rs.50 lacs loan, you have to pay Rs.30 lacs interest for a 10 year loan, but Rs.66 lacs interest for a 20 year loan. So select wisely.

INETREST RATE: Enter here the current offer in the market for the best interest rate. You can check offers on our site to enter the new interest rate. Default value we have put here is around 9.5% which we believe is much closer to the prevailing interest rates in the market.

What you get as an answer is the EMI you will have to pay monthly for the loan. If you would look around slightly on this page, you can find offers on Home Loans. Choose from one of them, get door-step service & save money. Then go on a long drive for a holiday and make your family happy.

Home Loan explained in detail

This is going to get technical. Don’t tell me I didn’t warn you! However, there are a few things that you need to know.

Tax Benefit of Home Loan

Section 24 – Tax Deduction with respect to HOME LOAN INTEREST

Deduction up to Rs.2 lacs can be claimed by house owners on their home loan interest if the house property is self-occupied (self or family). The same applies when the house is vacant. On rented out properties, the entire interest on the home loan is allowed as a deduction.

The deduction on interest however is restricted to Rs. 30,000 if any of the conditions given below for the Rs.2 lac rebate is not met.

  • The home loan must be for purchase and construction of a new property.
  • The loan must be taken on or after 1 April, 1999.
  • The purchase or construction must be completed within 3 years from the end of the financial year in which the loan was taken.

Please note that deduction on home loan interest cannot be claimed when the house is under construction. The interest paid during the time of loan taken till the time construction is completed, can be claimed as deduction in 5 equal instalments starting from the year the construction was completed.

Section 80 C – Home Loan Tax Benefit with respect to PRINCIPAL PAYMENT

Principal repayment on Home Loan can be claimed up to Rs.1.50 lacs. This however falls under the overall ceiling of deductions available under Section 80C. Registration & stamp duty charges can also be claimed under Section 80C.

Section 80EE – Tax Deduction with respect to FIRST TIME HOME OWNERS

This recently added provision to the Income Tax Act, provides first-time homeowners tax benefit of up to Rs.1,00,000.

To claim this deduction:

  • One must be a first-time home owner
  • Home loan should not exceed Rs. 25 lacs
  • Property value must not exceed Rs. 40 lacs
  • Loan should have been sanctioned between April1, 2013 to March 31, 2014
  • No other house should be owned by the taxpayer on the date the loan is sanctioned

How to claim tax deductions on home loans?

The amount of deduction you can claim depends on the ownership share you have on the property.
The home loan must also be in your name. A co-borrower can claim these deductions too.
The home loan deduction can only be claimed from the financial year in which the construction is completed.

FIXED or FLOATING

Fixed rate loans are not in vogue now but in case you really need to fix your monthly outflow you may like to go for them. However they come with a higher rate of interest than floating rate loans and more often than not carry a pre-payment penalty charge.

Another point to note with fixed rate loans is whether they are really fixed? Most banks offer fixed rate for the initial period and convert this into floating rate thereafter. Fixed rate period may vary from 1 year to 10 years though the total loan tenure may be upto as high as 20-30 years. Always check what will be the applicable rate after the fixed rate period ends. Many customers have often complained that they see a sharp increase in interest rate when the loan converts from fixed rate to floating rate.

A Floating rate loan is benchmarked to the overall market rates with some margin over & above that market rate. This is different bank to bank. The margin is different bank to bank. And many banks somehow find a way out to do a bit of tinkering with this margin to benefit tthemselves.

Document List

Documents required for Home Loan

Salaried

Self Employed Professional

Self Employed Non Professional

Application form

Y

Y

Y

KYC

 

 

 

Photographs

Y

Y

Y

Identity Proof

Y

Y

Y

Address Proof

Y

Y

Y

Age Proof

Y

Y

Y

Bank Statements

Y

Y

Y

Signature Verification

Y

Y

Y

Income Proof

 

 

 

Latest Salary Slip / Form 16

Y

 

 

Income Tax returns of 2 previous financial years along with complete financial/audit report.

 

 

Y

Income Tax Returns of 2 previous financial years.

 

Y

 

Other Documentation

 

 

 

Business Stability proof / Ownership proof

 

Y

Y

Employment Stability Proof

Y

 

 

Partnership deed and Letter signed by all partners authorising one partner

 

 

Y

Companies and Societies: Resolution by Board of Directors (or such managing body) and Memorandum and Articles of Association

 

 

Y

Disclaimer

The data generated herein is completely and solely based on the information/details provided by you in response to the questions specified by the site BankerBhai.com. Such information and the resultant data is provided only for user's convenience and information purposes. BankerBhai.com does not guarantee accuracy, completeness or correct sequence of any the details provided therein and therefore no reliance should be placed by the user for any purpose whatsoever on the information contained / data generated herein or on its completeness / accuracy. The use of any information set out is entirely at the User's own risk. User should exercise due care and caution (including if necessary, obtaining of advise of tax/ legal/ accounting/ financial/ other professionals) prior to taking of any decision, acting or omitting to act, on the basis of the information contained / data generated herein. The information contained / data generated herein may be subject to change, updation, revision, verification and amendment without notice and such information/data generated may change materially.

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