How Does A Home Loan EMI Calculator in India Work?

When researching for a lending institution to apply for a home loan, most individuals come across the home loan EMI calculators on various websites. This tool is beneficial for calculating EMIs in advance and managing the finances better. However, individuals might wonder, how does a home loan calculator in India work? Here are the details of the same. 

What is the formula for calculating home loan EMIs?

Therefore, An online home loan EMI calculator is a tool which mostly works on algorithms, thereby producing error-free results. The formula that it uses to calculate EMIs is:

EMI = [P x R x (1+R)^N]/[(1+R)^N-1], where,

Therefore, EMI is an abbreviation of the equated monthly instalments, P represents the principal amount, R is the monthly interest rate, and n is the total number of instalments in the repayment journey. Now that individuals know how the housing loan interest calculator works, they must also understand the factors that affect their home loan EMIs. 

What are the factors that influence home loan EMI?

Therefore, Given below are the factors that the calculator takes into account while calculating EMIs.

  • Principal: The principal of a loan is the sum that borrowers owe to the lender at the start of the borrowing process. It is directly proportional to the EMI. The higher the loan amount, the more will be the EMI.
  • Interest rate: The interest rate is the cost of the loan one borrows. It merely reflects the cost of one’s debt. It varies from one financial institution to the next. The EMI will increase in proportion to the interest rate. The home loan EMIs can be reduced by selecting a lender that provides borrowers loans with the lowest interest rates. The overall cost of a loan reduces by opting for a loan that has a low interest rate.
  • Repayment tenure: Often known as the time period of the loan, it is the length of time it takes borrowers to pay back the borrowed funds. The home loan EMI is inversely correlated to the tenor. Therefore, the longer the loan tenure, the lower will be the EMI. 

Therefore the borrower’s age at the time of borrowing and his retirement age are the two factors that lenders use to establish the loan tenure. Thus, it is said that the 20s are the best time to get home loans, as the repayment tenure can extend up to 25-30 years.

  • Processing fee: This amount is a price set by the lender, which is usually a percentage of the loan amount. It is the cost incurred by the financial institution in processing a loan application. Borrowers can find information concerning this sum in their home loan documents. 

The borrower has to pay this cost in full or in part at the time of application. However, the lender might not reimburse this money even if the borrower’s application is denied. Therefore, it is always wise to check the home loan fees and charges before going ahead with an application. 

  • Prepayments: Making prepayments on a real estate loan can assist borrowers in lowering the remaining principal. The borrower’s interest charges get consequently decreased as a result. 

Therefore, Apart from knowing how online home loan calculators work, borrowers should also use online eligibility calculators to get an estimate of how much loan they can get.


Furthermore, you can check your pre-approved offer before applying for a loan. These offers are available on various secured and unsecured loan products and aid in accelerating and simplifying the loan procedure. To check the offers, borrowers need to enter their names and contact details correctly. 

Several financial institutions bring pre-approved offers for their new and existing customers on various secured and unsecured loans. Interested individuals can enter their names and contact numbers in the required section to check their pre-approved offers and make the loan process easier and faster.

In addition, borrowers can use the various home loan calculators in India to calculate their monthly financial liabilities against a home loan. Moreover, an important eligibility criterion for home loans is the credit score of the borrower. In addition, applicants should try to repay all their existing loans and maintain a CIBIL of 750 and above before applying for a home loan. 

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