What is a Home Loan EMI Calculator?
A home loan is usually the largest single number in a household budget, and the EMI is only half the story. The figure worth looking at is the total interest, which on a long tenure often approaches the amount borrowed.
Enter the loan amount, the rate and the tenure and the tool returns the monthly EMI, the total repayment and the proportion of it that is interest.
Tenure moves the total far more than the rate does. Shortening a twenty year loan to fifteen raises the EMI modestly and cuts the interest substantially, which is why prepaying early in the schedule is worth so much more than prepaying late: in the first years almost all of each EMI is interest.
Frequently asked questions
How is home loan EMI calculated?
EMI equals P times r times (1+r) to the power n, divided by (1+r) to the power n minus one, where P is the principal, r is the monthly rate and n is the number of months. It is the same formula for every reducing balance loan.
Does prepaying early save more than prepaying late?
Substantially more. Early in the schedule most of each EMI is interest, so a prepayment removes principal that would otherwise have accrued interest for the remaining years. The same amount paid in the final years saves very little.
Should I reduce the EMI or the tenure when I prepay?
Reducing the tenure saves far more interest, because you stop paying sooner. Reducing the EMI eases monthly cash flow but keeps you in the loan for the original term.
Is the rate fixed for the whole tenure?
Most Indian home loans are floating and reset against an external benchmark, so the EMI or the tenure changes when rates move. This calculator assumes a constant rate, which is a reasonable planning figure and not a forecast.