Top-Rated Home Loan EMI Calculator. Also usable as Personal & Car Loan EMI Calculator

An equated monthly installment (EMI) is the fixed monthly payment made by a borrower to the lender each calendar month. The amount of the EMI depends upon the loan amount, interest rate charged for the loan and the duration in which the loan is to be repaid. The EMI is made up of two parts, the principal amount and the interest on the principal amount divided across each month in the loan tenure. The EMI is always paid up to the lender on a fixed date each month until the loan is paid off in full at the end of the tenure. The benefit of an EMI for borrowers is that they know precisely how much money they will need to pay toward their loan each month, making the personal budgeting process easier.

Now, you might assume that the EMI is applied in equal parts towards the principal and the interest every month, however this not the case. During the initial years the interest component repaid is higher and during the latter years of repayment the principal component is higher. While a portion of every payment is applied towards both the interest and the principal balance of the loan, the exact amount applied to principal each time varies (with the remainder going to interest). An amortization schedule reveals the amount applied towards interest, as well as the amount paid towards the principal balance, with each payment. Initially, a large portion of each payment is devoted to interest. As the loan matures, larger portions go towards paying down the principal. In addition to breaking down each payment into interest and principal portions, an amortization schedule also reveals the remaining principal balance on each payment date.

EMI is an oft repeated term that is associated with any loan taken. Let us understand how EMI works and what are the different aspects associated with EMI. The EMI facility helps the borrower plan his budget. The EMI is calculated taking into account the loan amount, the time frame for repaying the loan and the interest rate on the borrowed sum. read more

Sameer Tiwari, a Pune based mechanical engineer, thought he had made a "prudent decision" by opting for a fixed rate EMI when he took his home loan five years ago from a reputed national bank. Three years after the date of disbursement, Sameer received a letter, which said it was time for renewal of his loan and that the interest on his fixed home loan had been increased by 0.5 per cent. Though this did not mean a change in the actual EMI he paid, this would however reflect first on his loan tenure, which would be increased to accommodate the interest change. On checking with the bank, he learned that there was a clause in the agreement that said the fixed rate was only for a period of three years and not for the entire loan tenure! read more

The term 'rest' comes into the picture only for reducing balance loans. In a reducing balance loan with each EMI paid, the outstanding loan amount is recalculated. A 'rest' is the period in which the bank recalculates the loan amount outstanding based upon the amount of loan paid back through Equated monthly installments, i.e. EMIs. Note that this is also the periodicity of compounding. read more

Banks have something called the benchmark prime lending rate, which is a reference interest rate that is used as a benchmark to determine the interest rate that is passed on to the customer. This will accordingly reflect in the EMI the borrower has to shell out to repay his loan. The interest rate that is finally passed on to the customer is X% plus or minus this benchmark prime lending rate and will correspondingly increase or decrease his EMI or loan tenure, at the time of applying for his loan. read more

I had taken a home loan of Rs 9 lakh from ICICI bank in November 2004, at a 7 per cent floating interest rate for 20 years. Since then, interest rates have gone up considerably. Now, my Equated Monthly Instalment (EMI) has also increased and I have a remaining tenure of 23 years. I am planning to shift my loan to State Bank of India (SBI). They have offered almost the same EMI and for a 15 year tenure. Should I shift? -- Tanmay Shastri When interest rates increase, either loan tenure or EMI (or both in some cases) go up. See if another lender offers you a considerably lower EMI or tenure, with other aspects being more or less constant. If yes, then you stand to gain with a switch. read more