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EMI calculator
Work out the equated monthly instalment on any loan, and see how much of what you repay is interest.
The EMI formula
EMI = P × i × (1 + i)^n ÷ ((1 + i)^n − 1)
P is the loan amount, i the monthly interest rate and n the number of monthly instalments. A ₹50,00,000 home loan at 8.5% for 20 years has an EMI of about ₹43,391. Over the full term you repay roughly ₹1.04 crore, of which about ₹54.1 lakh is interest: more than the amount borrowed.
Why early EMIs are mostly interest
Interest is charged on the outstanding balance, which is highest at the start. In the first year of the loan above, most of each instalment is interest and only a small part reduces the principal. This is also why prepaying early saves far more than prepaying late. Our guide to home loan prepayment covers the trade-offs.
Questions
Should I choose a shorter tenure?
A shorter tenure raises the EMI and cuts total interest sharply. Take the shortest tenure whose EMI you can pay comfortably even if rates rise by one or two percentage points.
Are there prepayment charges?
Banks and housing finance companies cannot levy prepayment charges on floating-rate home loans taken by individuals. Fixed-rate and other loans may carry charges; check your sanction letter.
What happens when rates change?
On a floating-rate loan, lenders usually keep the EMI the same and change the tenure. You can ask to change the EMI instead.