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An EMI Calculator or Equated Monthly Installment Calculator is a tool which calculates your monthly EMI payments for a Home Loan within a few seconds.
To use the Home Loan EMI Calculator, all you need to do is enter the variables like principal amount, interest rate, tenure, etc. in the calculator and it will give you the EMI amount instantly.
It is a free tool available on Magicbricks 24 X 7. You can use the EMI Calculator to make an informed decision by comparing various loan EMIs before you finalise a Home Loan.
How to Calculate Home Loan EMI Using the Formula?
The classic way of calculating the EMI is by using the formula stated below:
EMI = [P x R x (1+R)^T]/[(1+R)^ (T-1)].
The variables used here stand for:
EMI - Equated Monthly Installments
P - Principal Amount of the Loan:
R - Rate of Interest on the Loan (monthly)
T - Tenure of the Loan or the no. of installments to be paid (monthly)
Let's take an example to understand this clearly. For instance, you have taken a Home Loan of Rs 2 Lakh which is to be paid in 2 years
at an interest rate
of 20% per annum.
First, convert the yearly interest rate into months. We can obtain the monthly interest rate by dividing the yearly interest rate
by no. of months in a year i.e. 12. So, monthly interest will be 20/12 = 1.66%.
Now, put all the variables in the formula:
EMI = [P x R x (1+R)^T]/[(1+R)^T-1]
EMI= [2,00,000 x 1.66/100 x (1+1.66/100) ^ 24 / [(1+1.66/100) ^ 24 - 1)
EMI= Rs. 10,179
Even, the EMI Calculator uses the same formula to calculate the EMI of Home Loan. We also recommend calculating the EMI
via EMI Calculator as it is accurate, requires minimal calculation and can determine the EMI within seconds.
Interest Rate is the cost of borrowing money and is calculated as a percentage of the amount borrowed. Interest rates may
vary from bank to bank. As a borrower, you should try to choose a lender that offers a home loan at the lowest interest rate
for your specific requirements.
There are two types of home loan interest rates you can choose from:
Fixed Interest Rate: This type of interest rate remains unchanged throughout the loan tenure. Thus, your EMI also remains
the same. Choosing Fixed Interest Rate Loan is better if you expect the rates to increase in the future.
Floating Interest Rate: This type of interest rate keeps changing in line with the market rates. Thus, your EMI also keeps
fluctuating. Floating interest rate loans are better if you expect interest rates to go down in the future.
Latest Home Loan Interest Rates
Tips to Reduce Your Home Loan Interest Rate
There are various ways you can reduce your home loan interest and EMI payments.
Choose a shorter tenure: When you choose a shorter tenure home loan, though the EMI is higher, your overall interest
payment is reduced drastically.
Apply for a Balance Transfer Loan: With a Balance Transfer home loan, you can transfer your existing home loan to another
lender that is offering lower interest rates.
Make loan prepayments: In the initial years of home loan, you pay more towards the interest and less towards the principal
amount. Therefore, if you make prepayments regularly, you can reduce your interest burden.
Choose the right EMI calculation method: There are two ways banks can calculate your EMI: Flat Rate method and Reducing
Balance method. Under the Flat Rate method, the interest is calculated on the original loan amount for the entire tenure;
thus your interest outgo remains equal throughout the tenure and doesn't decrease as the principal amount reduces.
However, in the latter method, the interest is calculated and revised every month based on your outstanding principal
amount.
All the borrowers are required to meet certain eligibility criteria to get their home loan approved. If you don't meet any of the
eligibility criteria set by the bank, your application may get rejected. Understanding the home loan eligibility criteria can
help ensure a smooth approval process for you.
Factors Affecting Home Loan Eligibility Criteria
Here are some of the key factors that may affect your home loan eligibility:
Age: It's one of the most important factors to determine the home loan tenure. For instance, getting a home loan with 30-
year tenure is easier for a young individual compared to an aged individual.
Income: Whether you are a salaried or self-employed individual, you must meet the minimum income requirement set by
the banks. The income requirement may vary from bank to bank.
CIBIL Score or Credit Score: This score is used by lenders to determine your creditworthiness. Higher the score, the better the
chances of loan approval. A CIBIL score of above 550 and near 900 is generally considered good. However, if your CIBIL score
is not good, you can still apply for a home loan.
Employment/ Business type: Lenders also consider your job type or business type to determine your eligibility. Applicants
with a stable job or business income have a higher chance of getting the loan approved.
Check out some of the key home loan eligibility criteria set by major lenders in India:
Bank-wise Home Loan Eligibility Criteria
For successful and faster processing of your Home Loan, you need to furnish a list of documents. Although the complete list
of documents required may vary from bank to bank, there are certain documents that are generally required to be
submitted with the application.
In order to make your experience hassle-free, here's a document checklist for you:
1. Fully completed application for Home Loan
2. Loan applicant's Passport size photographs
3. Identification Proof (Any of them)
Driving License
Passport
Aadhar Card
Voter I Card
the banks. The income requirement may vary from bank to bank.
4. Age Proof (Any of them)
PAN Card
Passport
Driving License
Birth Certificate
10th class Marksheet
Bank Passbook
is not good, you can still apply for a home loan.
5. Residence Proof
Utility Bill (Electricity, Telephone, Water, Gas Bill/Slip)
Aadhar card
Voter ID card
LIC Policy slip
Ration card
Letter of Public authority verifying the applicant's address
6. Proof of Income
(For Salaried Applicants)
Last 2 Months Payslip
Form 16
Increment or Promotion Letter
IT returns of the last 3 years
Investment proofs such as Fixed Deposits, Shares, etc.
(For Self-employed)
Business License details (or any other equivalent document)
Last 3 years IT returns
Balance Sheet & Profit and Loss Statement of Firm/Comapny (attested by a CA)
Professional Practice License (For Doctors, Lawyers, Consultants, etc.)
Registration Certificate of Establishment (For Shops, Factories, etc.)
Proof of Business Address
Other Important Documents for Home Loan
1. Occupancy Certificate
2. NOC from Builder/Society
3. Registered Sale Deed, Stamped Agreement of Sale or Allotment Letter obtained from the Builder(original copy)
4. A detailed estimate of the construction cost of the House
5. Receipts of:
Advance payments made towards the purchase of flat (original copy)
Payment or bank account statements showcasing payments made to the Builder or Seller
Land tax/Property Tax
Possession certificate issued by the revenue authority (Original copy)
6. Copies of Maintenance and Electricity Bills
7. An approved copy of the building plan (key plan/floor plan in case of purchase of flats)