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Posted Date: Apr 20 2021   |   Posted By : DCNPL

How to calculate home loan EMI?

Home buying does not only involve a significant amount of capital investment but also home loan plans and calculations of monthly instalment that one needs to pay. This amount calculation is important as it is a commitment of regular monthly payment and thus proper calculation is required to arrive at a realistic ballpark.

Factors that determine EMI:

  1. Value of the property

The final value of the property depends on location, size and the other amenities of the property. The final price of the property is a major factor in arriving at the EMI amount.

  1. Annual earning and other EMI amount

Your yearly income and thus the monthly earning determines your paying back capacity. The Ideal limit to use up in paying EMI is 50% of your monthly income. If you already have an ongoing EMI from another borrowing that is 20% of your income, you can use only another 30% of your income in paying EMI.

  1. Rate of interest

The home loan rate offered by various banks is different. It also depends on the borrower's credit score and the stability of the income. 

  1. Number of years

The number of years that you take the loan for also affects your EMI amount. If you consider doing a 50% down payment, you will, in turn, borrow the loan for a lesser tenure which will reduce your EMI amount.

 

Moneylenders often determine this tenure basis the time when the borrower will reach the age of 60 years. This means if you are 40, your home loan tenure will be 20 years. But also keep in mind, the higher the tenure of the loan, the more interest amount you will pay. 

 

Now these factors combined will establish the EMI amount. Ideally, the maximum home loan amount one can get is 90% of the property value but in the market scenario, money lenders offer only 80% of the property value on a loan.

 

Calculation

 

There are various online tools to directly calculate your EMI amount, you can also excel to draw an EMI chart.

 

EMI = [P x (R/100) x (1+R/100) ^n] / [(1+R/100)^ n-1]

Here, P= Principal loan amount, R= Rate of interest per month, n= Number of monthly instalments.

 

An example:

Assuming, P= Rs 30 lakh, R= 9 percent per annum= 9/12= .75 per cent per month, N= 180 months

EMI = ((300000*.75 /100*(1+.75 /100) ^180/((1+.75 /100)^180-1))) = Rs 30,428

 

Indore is one of the fastest-growing smart cities and at this point, any investment in the city will fetch high ROI. Indore has ample job and educational opportunities, soothing climatic conditions, good medical facilities and superb connectivity to various other states. Buy flats in Indore and plots in Indore for good returns. Buy 2bhk flats in indore, 3bhk flats in indore or buy plots in indore according to your needs.

 

If you are looking to invest in real estate in Indore, investment in the super corridor area is one of the best choices. To know more about property in the super corridor area, flats in super corridor Indore, plots in super corridor Indore, visit DCNPL Hills Vista (https://www.dhillvistaindore.com/

 

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