Home Loan EMI Calculator

Following are the factors that affects EMI:

• Tenure of the loan: Longer tenure means lower EMI and vice-versa. If the tenure of the loan is more than borrower pays greater amount towards interest whereas if the loan tenure is shorter, then payment towards interest is lesser.
• Interest applicable on the loan: Higher interest leads to higher EMI obligation and vice-versa. There are two types of interest rate option usually offered by banks, i.e. fixed rate and floating rate. In fixed rate interest loan, the EMI obligation remains same during the tenure of the loan. In floating rate loan, the EMI changes with change in the interest rate. If the interest rate increases, the EMI obligation also increases and vice-versa.
• Loan amount: Higher loan amount would require greater EMI obligation and smaller loan would require smaller EMI obligation.
• Credit score of the borrower: A higher credit score usually lowers the risk premium charged by the banks therefore it translates to low rate of interest and EMI obligation coming down. A credit score of 700-750 or less, usually increases the interest rate and hence EMI also increases accordingly.

The EMI on Rs 20 Lakh home loan would depend on the tenure you are comfortable with and the interest applicable thereof. The prevailing interest rate on home loan is in the range of 7.25% to 8.25% pa depending on loan amount, tenure and credit score of the applicant. Assuming the loan tenure of 20 years, the EMI would be Rs 15808 and Rs 17041 at 7.25% and 8.25% interest respectively. If the tenure is increased to 30 years, the EMI would be Rs 13633 and Rs 15025

Loan amount eligibility depends on various factors such as age of the applicant, interest rate, income, loan to value (LTV) of property, etc. Banks check borrower’s income after meeting all fixed obligations to ascertain the loan eligibility amount. Usually banks allow loan repayment till the borrowers attains the age of 65 years or 70 years. So, suppose you are applying for a home loan at age of 50 years, in that case the bank will allow maximum repayment period of 15 years to 20 years. You can do reverse calculation using the EMI calculator to ascertain the maximum eligible home loan amount. Set the maximum allowed tenure, prevailing interest rate and select the loan amount that results in EMI close to Rs 25000 (Income after adjusting fixed obligations such as rent, other EMIs etc). Assuming, rate of interest at 7.5%pa and loan tenure of 15 years, the maximum loan amount eligibility would be around Rs 27 Lakh. Another way is 60% of income multiplied with number of repayment months allowed as per maximum loan tenure. For example, Rs 60% of 25000x15x12= Rs 27 Lac Banks also checkout the LTV. Banks allow lower of LTV and amount arrived as per income after fixed obligation. For example, suppose you want to buy a home worth Rs 30 Lac. Assuming, bank is allowing LTV of 85% i.e. Rs 25.5 Lac. So, out of Rs 27 Lac and Rs 25.5 Lac, the bank will allow the lower amount as loan i.e. Rs 25.5 Lac.

The EMI on Rs 5 Lakh home loan would depend on the tenure you are comfortable with and the interest applicable thereof. The prevailing interest rate on home loan is in the range of 7.25% to 8.25% pa depending on loan amount, tenure and credit score of the applicant. Assuming the loan tenure of 20 years, the EMI would be Rs 3952 and Rs 4260 at 7.25% and 8.25% interest respectively.

The minimum salary to apply for a home loan may vary from banks to banks, however, it ranges around Rs 25000 per month for metro cities and Rs 20000 per month for other than metro cities.

The interest rate on home loan varies from banks to banks. There are several factors that impacts the interest rate, such as loan amount, credit score of the borrower, tenure of the loan and LTV ratio. Higher credit score usually translates to lower interest rate. Lower LTV ratio usually reduces the interest rate. Smaller amount and shorter tenure usually help in keeping the interest rate down. For Rs 20 Lac loan, the interest rate currently varies from 7.25% to 8.25% pa subject to various factors mentioned above.

The EMI on Rs 40 Lakh home loan would depend on the tenure you are comfortable with and the interest applicable thereof. The prevailing interest rate on home loan is in the range of 7.25% to 8.25% pa depending on loan amount, tenure and credit score of the applicant. Assuming the loan tenure of 20 years, the EMI would be Rs 31615 and Rs 34083 at 7.25% and 8.25% interest respectively.

Banks usually allows loan up 90% of the value of the property or loan amount as per income of the applicant, whichever is lower. The remaining amount has to be paid by the borrower as loan margin. For example, if the bank is allowing loan of 80% or 90% of the value of the property, then remaining 20% or 10% respectively, has to come as margin through borrower’s contribution. So, 100% home loan amount is practically not possible in India.

Depending on fulfilment of home loan eligibility criteria, income of the borrower and LTV ratio, the banks decide the maximum loan amount. Higher income after meeting fixed obligation and high LTV ratio allowed by the bank can translate into maximum loan amount.

Depending on fulfilment of home loan eligibility criteria, income of the borrower and LTV ratio, the banks decide the maximum loan amount. Higher income after meeting fixed obligation and high LTV ratio allowed by the bank can translate into maximum loan amount.

The processing fee varies from banks to banks, usually it ranges around .2% to .5% of the loan amount, subject to applicable upper limit. However, sometimes banks waive the processing charge on the home loan, for example during special offers, festive period, etc.

LTV ratio is the ratio of loan amount to the value of the property for which loan is planned. Banks usually allows LTV ratio up to 90% of the value of property. If the income and credit score of the borrower is adequate, then the banks may allow the maximum LTV ratio of 90% while considering the loan amount. However, if the income is not adequate to service the loan or the credit score is below normal, then the bank may reduce the LTV as per its assessment. For example, if the credit score is below 700 and the income is also not adequate, then the lender may allow LTV of 60% of the value of the property. It means the borrower would be required to arrange down payment of 40% from own sources to get the home loan in this case. The home loan borrower can voluntarily opt for a high LTV and pay greater down payment despite good income and credit score, as in such case often the bank charges lower interest rate. Banks considers the lower one out of loan amount determined as per income and amount as per LTV ratio, while sanctioning the home loan.

Credit score is the representation of an individual’s credit worthiness in terms of numerical range. Credit score is determined on the basis of financial discipline and credit report of the individual. Credit score is determined by credit bureaus such as CIBIL, Experian, Equifax, etc. Credit score by CIBIL is popularly accessed by the lender while considering a loan application. The credit score ranges between 300 to 900. Higher score shows better credit worthiness whereas lower score towards zero shows poor credit worthiness. If the score is -1, it shows not credit history whereas ‘0’ shows a credit history of more than 6 months old. Usually the banks consider a credit score of 750 or more to be ideal and 700 to 750 to be fair while assessing the home loan application. Higher score of 800 or more can reduce the interest on home loan, whereas a score of below 700 can add u risk premium and increase the interest on home loan.

Factors like loan repayment, credit card payment, unsecured loans, etc. impacts the credit score. Timely repayment of loan EMI can impact the credit score positively, whereas as a loan default can spoil the credit score. Too many unsecured loans impact the credit score negatively. Delay in the payment of credit card due can spoil the credit score. Also, higher credit utilization ratio while using the credit card, can negatively impact the credit score. If a person wants to improve the credit score, then focus on timely repayment of loan and credit card bill and ensure low credit utilization ratio while using the credit card.

Floating rate loan are not subject to any prepayment or pre closure charges. You can prepay your home loan by any amount during the period of loan. Similarly, you can close the home loan any time during the loan period and you don’t have to pay charges or penalty for it. It is important to note here, that fixed rate loan may be subject to prepayment or pre-closure charges depending on the bank’s term and condition. So, it allows borrower having a floating rate loan to switch the loan to another lender from the existing one, if the loan rate is attractive or for any other reason.

REPO rate is the rate at which the RBI lends money to the banks. Before July 2019, the banks were charging interest rate on its retail lending products based on the MCLR rate under which the borrowers where not getting the immediate benefit of quick rate cuts by the RBI. So, from July 2019, the RBI directed all the banks to link its retail lending products to an external benchmark such as REPO, Treasury bill, etc. Most banks opted to link their retail lending product including home loan to the REPO rate. Banks charges spread over the linked REPO rate to arrive at the lending interest rate. For example, recently the RBI reduced the REPO rate from 5.15% to 4.40%. So, if a bank was earlier charging an interest of 8%pa on home loan based on the REPO rate of 5.15%, will now reduce the interest rate to 7.25% based on REPO rate at 4.40% on revision.

When the interest rate is expected to fall, then it’s better to opt for a floating rate loan. When the interest rate trend is upward side, then its good idea to opt for a fixed rate home loan, provided the difference between floating and fixed rate interest is not substantial. Usually interest rate charged by the banks on fixed rate loan is higher than the floating rate loan. If you are planning to avail home loan for a long period i.e. more than 10 years, then floating rate loan is a better choice because when the tenure is very long, the impact of interest rate volatility gets minimized. It’s also important to consider the factors such as flexibility to switch the loan, associated charges, prepayment fees, etc. while evaluating option between the fixed rate and floating rate loan.