Whether you want to buy your second home, a luxury villa, or a plot of land to build your dream home on, you need to think about the down payment on the property as well as future payments to complete your purchase. This process involves planning your home buying journey and choosing a good bank to get a home loan from. Once your home loan is sanctioned, you can factor in the monthly payments to be made against your purchase into your budget.
When it comes to a home loan, you can get tailor-made options that offer you the tenure you want, repaymen facilities, and adjustable or fixed interest rates. Here is everything you need to know about EMI payments that will help you fulfill your dream of owning a home.
What is an EMI?
EMI is an acronym that stands for Equated Monthly Installment. This amount is the repayment you own on the home loan that you have borrowed from the bank. EMIs need to be paid on a monthly basis for a specific loan tenure that you agree to at the start. Different banks offer different home loan amounts with varied repayment tenures and rates of interest. Typically, a home loan is a long-term payment with tenures that go from 10 to 30 years.
How to calculate EMI?
EMI calculation is made simple by a number of home loan EMI calculators that are freely available online. All you have to do is put in the relevant information such as the loan amount you require the repayment tenure, and potential interest rate to get the monthly EMI amount that you will need to pay within those parameters. You can also check your home loan eligibility to understand how much you are eligible to borrow based on your current income, age, and liabilities.
The formula of a home loan EMI calculation is EMI = [P x R x (1+R) ^N]/[(1+R) ^N-1], where P is the principal loan amount, N is the tenure in months, and R is the monthly interest rate that
Would be payable. A home loan processing fee will be added to this amount depending on the bank you have chosen.
Making Home-Buying Easy
In March 2020, Reserve Bank of India (RBI) lowered its repo rate by 115 basis points (bps). Most banks decided to pass on the incentive to their customers and cut down the rate of interest on home loans. At present, some of the banks are offering home loan at just 6.70 per cent per annum. Home loan rates are at a 15-year-low, and most home buyers are taking full advantage of this low rate of interest.
Moreover, the process of taking a home loan too has become very seamless now and you have the option to choose easy installments, and opt for flexible payment schedules as per your convenience. All one has to do is to walk into any bank to avail the loan and fulfill your dream of getting the house that you have your eyes on.