Home Loan EMI Calculator – Rules & Logic

1. Loan Amount (Principal)

   • EMI is calculated based on the total loan amount sanctioned by the bank or financial institution.

   • The loan amount excludes down payment and registration charges.

2. Interest Rate

   • EMI depends on the annual rate of interest offered by the lender.

   • Interest rate is converted into a monthly rate for calculation.

   • Even a small change in interest rate significantly impacts EMI and total interest payable.

3. Loan Tenure

   • Tenure is the total loan duration (in years or months).

   • Longer tenure results in lower EMI but higher total interest.

   • Shorter tenure results in higher EMI but lower total interest.

4. EMI Calculation Formula

   • EMI is calculated using the standard formula:
     EMI = [P × R × (1+R)^N] / [(1+R)^N – 1]
     where:

     • P = Loan Amount

     • R = Monthly Interest Rate

     • N = Loan Tenure in Months

5. EMI Components

   • Each EMI consists of Principal + Interest.

   • In the initial years, interest component is higher.

   • Over time, principal repayment increases.

6. Prepayment & Part Payment

   • Prepayments reduce the outstanding principal.

   • This can lower EMI or reduce loan tenure.

   • Some banks may charge prepayment penalties (as per lender policy).

7. Floating vs Fixed Interest Rate

   • Fixed Rate: EMI remains constant for a defined period.

   • Floating Rate: EMI may increase or decrease based on market conditions.

8. Processing Fees & Other Charges

   • EMI calculator does not include processing fees, legal charges, or insurance.

   • These costs are payable separately.

9. Eligibility & Final Approval

   • EMI shown is indicative.

   • Final EMI depends on borrower eligibility, credit score, and lender approval.

10. Tax Benefits (Informational)

• Home loan EMIs may qualify for tax benefits under applicable income tax laws.

• Actual benefit depends on individual tax structure.