Home loan has also emerged as a popular credit instrument among borrowers wanting to a house. Often, while paying housing loan EMIs, borrowers may possess some surplus funds for prepayments. Thus, calculating EMI beforehand helps them know about the amount of money to keep every month for better managing their finances. In the following guide, borrowers will know how to calculate home loan EMI easily.
How to calculate home loan EMI?
To compute the housing loan EMI, borrowers should go through this mathematical formula as stated below:
EMI = P x R x [{(1 + R) ^N} / {(1+R) ^(N-1)}]
Here,
EMI stands for the Equated Monthly Instalment
P denotes the principal amount of loan
R signifies the monthly interest rate
N denotes the total number of months during loan tenor.
However, computing the home loan EMI manually is a hectic process and it can lead to many errors. This is why there is the availability of a home loan EMI calculator for the convenience of borrowers.
Steps to use the home loan EMI calculator
Applicants availing home loans can use an online home loan EMI calculator by following the steps as discussed below:
Step 1: Visit the official website of a preferred lender
Step 2: Go to the loans section and select the ‘Home Loan’ tab
Step 3: Find out the EMI calculator page.
Step 4: Move the pointers to set the amount of loan, interest rate, and tenor
Step 5: Double-check the figures and click on ‘Submit’
Upon completion of these steps, borrowers will be able to see their home loan EMI amount within seconds.
After knowing the EMI amount, applicants can proceed with the application process for a housing loan.
What are the steps to apply for a home loan?
Mentioned below is the easy step-by-step process to avail a housing loan online:
Step 1: Visit the official website of a preferred lending institution
Step 2: Navigate to the loans section and select the ‘home loan’ option
Step 3: Compare loan offers and select the ideal one
Step 4: Fill out the application form for home loan carefully
Step 5: Select the home loan interest rate, amount, and tenor
Step 6: Upload the essential documents
Step 7: Cross-check the documents and application form
Step 8: After this, click on ‘Submit’
However, before applying for a home loan, borrowers should meet the eligibility criteria and keep the necessary documents handy.
Eligibility criteria for a home loan
Following are the eligibility criteria to avail a home loan for salaried and self-employed individuals:
Salaried persons
- Applicant should be an Indian citizen
- Age must be between 23 years and 62 years
- Borrowers should have at least three years of working experience in a public or private company.
Self-employed individuals
- Applicant must have Indian citizenship
- Age must be between 25 years and 70 years
- Borrowers should have a minimum of 5 years of experience in business
Documents required to avail a home loan
Mentioned below are the documents required to apply for a home loan:
- Copy of Form 16
- Property papers
- ID proof (comprise PAN card, Aadhaar card, passport)
- Address proof (comprise Aadhaar card, electricity bill, ration card)
- Profit and Loss account and balance sheet
- Income proof (include bank account statement of last 6 months, current salary slips for last 3 months, IT Returns for the last three years)
Knowing how to calculate home loan EMI may help an individual by streamlining their application process for a housing loan. However, before availing this credit option, applicants should know that the terms and conditions of home loans vary from one lender to another. Thus they should conduct thorough research and make prudent decisions.
