Home Loan EMI Calculator

Home Loan EMI Calculator 2019 - 2020

Owning a home is essential to provide your family with a stable environment and nourishment. Home is a place where we can relax and spend quality time with the family. People who do not have their own home often live in the rented places that are generally kept on migrating from one place to another. Buying a home is very expensive and a middle-class individual works all his life to buy a home. To provide the funding for the family needs, a home loan can be used. Banks provide a home loan to help people buy their home and in return charge a monthly EMI that consist of the Principle amount and the interest.

What is Home Loan?

A home loan is a financial tool that banks provide to meet our financial need to buy a home. Owning a home provides protection in society and keeps your life stable. A home loan can help an individual to get all these things. A home loan is provided by the banks and other financial institutions in a big amount and a tenure period that can go up to 50 years. This type of loan is a long term loan and can provide you with a stable payment option every month as per the required needs.

How Home Loan EMI Is Calculated?

Equated monthly installments or EMI is a monthly payment option provided to the individual who wants to avail any kind of loan. EMI option provides a liquid flow for everyday living a does not affect the cash flow for an individual. Home loan calculator uses a mathematical formula to calculate the Monthly EMI, the formula used by the home loan calculator is –

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

Where, P stands for Principle Amount

R stands for Interest Rate

N stands for Number of Years

P, N, and R are variables meaning when any one of the variables changes the EMI amount changes with it. For Example- A Home Loan of Rs. 20 Lakhs is taken at the interest rate of 9.0% p.a for a tenure of 7 years then the EMI amount calculated is as follows-

[20 Lakhs x 9.0 x (1+9.0)^7]/[(1+9.0)^7-1]

The amount for Monthly EMI is Rs.32, 178.19/-

Instead of Using the formula to find out the Monthly Emi you can use the Home Loan Calculator to find the monthly EMI amount along with the Interest Payment and the total amount payable to the bank.

Eligible Property for Home Loan

Home Loan is only provided to those people who have proper documentation. The most important part of the loan processing is the area of the property you want to buy. There are many different types of locality that cannot be used for the Home loan. For Example-Any loan for the property in Katcha colony then the loan will be rejected.

Documentation Required for Home Loan

There are two different types of people who seek Home Loan and there is two different set of documents that are required. All the documents have to be xeroxed and self-attested to ensure the credibility. The following are the two different types of people and the respective documents required-

Self Employed

Home Loan application
Applicant’s income proof (ITR, Bank statement, Other bank statement reflecting the income)
Applicant’s identity proof (Aadhaar Card, PAN Card, voter Card, Driving etc.)
Applicant’s age proof (Aadhaar Card, PAN Card, voter Card, Driving etc.)
Applicant’s address proof (Aadhaar Card, PAN Card, voter Card, Driving etc.)
Applicant’s Business Details (Location, business name, registered number etc.)
Applicants educational proof (school/diploma/degree certificates)
Applicant’s bank statements (Last 6 Month)
Property details on which the loan is applied (if finalized)

Salaried

Home Loan application
Applicant’s income proof (ITR, Bank statement, Other bank statement reflecting the income)
Applicant’s identity proof (Aadhaar Card, PAN Card, voter Card, Driving etc.)
Applicant’s age proof (Aadhaar Card, PAN Card, voter Card, Driving etc.)
Applicant’s address proof (Aadhaar Card, PAN Card, voter Card, Driving etc.)
Applicant’s employment details (Salary Slip, Company name etc.)
Applicants educational proof (school/diploma/degree certificates)
Applicant’s bank statements (Last Six Month)
Property details on which the loan is applied (if finalized)

Factor Affecting Home Loan Amount

There are a lot of factors that affect the Home loan amount, EMI Installments and other variables. The Home Loan amount can be affected by the various factor which is listed as follows-

Profession (Salaried, Self- Employed, Professional or a Businessman)
Income
Credit Score
Age
Qualifications
Number of dependents
Co-Applicants Income
Assets, Liabilities, Stability, and Continuity of Occupation of the borrower

Loan Approval Process

There are different stages through which the loan application goes through to be finally approved. the loan approval process first starts by applying for the loan by filling the Loan application with the proper documentation as mentioned above. A small fee called Processing Fee will be charged along with the Loan Application which is non-refundable. After the submission of the loan application then the verification process will be initiated and on approval, an offer letter will be released after which the evaluation, amount and other important factors are taken into consideration. After this stage, the agreement for Loan will be signed and the amount is submitted to your bank account. The said process of approval is as of 2019.

Type of Interest Rate for Home Loan

The interest rate of Home loan is different for different bank and it is of two types -

Floating Interest Rate
Fixed Interest Rate

Floating Interest Rate

Floating Interest Rate is the interest rates vary depending on the market lending rates. The EMI amounts vary and are prone to fluctuations. In this case, the bank provides an alternative to increasing the tenure of the loan. In year 2020 home loan interest rates are expected to be lower side.

Fixed Interest Rate

As the name suggests a fixed interest rate is the interest rate option provided for the loan fixed through the loan payment tenure. The EMI Payable will be same throughout the tenure.

RBI Guidelines for Home Loans

RBI is the leading body that governs the banking and finance sector. RBI issued some guideline that must be followed which will help you in availing the loan. The following are the guideline that helps you in availing the loan-

RBI has increased the Loan to Value ratio to make the Loan more affordable to the buyers. The loan amount of 90% below Rs.30 Lakhs is provided and 75% for above Rs.75 Lakhs.
RBI has abolished the Pre-payment charges which enables the borrower to pay the loan amount before the tenure period.
RBI also waived off the foreclosure charges which will make the loan borrowing more beneficial for the borrower.