What is an EMI?

Loan amount, tenure and interest rate are the three key parameters of a loan and these vary in case of different loan providers. EMI applicable to a loan varies according to all these three parameters. Therefore, before choosing a particular loan, it is very important to have an understanding of these three parameters and how do they relate to the loan EMI.
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How are Loan EMIs Calculated?

A sum of money borrowed from a financial institution or bank to purchase a Home. Home loans consist of only Floating Interest rate or fixed interest rate or fixed plus Floating Interest rate with Payment terms as per bank norms. You can avail home loans as per your requirement & needs. Loans mentioned below are as per segment and requirement.

Loan Amount 5 Year Loan 10 Year Loan 15 Year Loan 20 Year Loan 25 Year Loan 30 Year Loan
10 Lacs ₹ 19,683 ₹ 11,431 ₹ 8,794 ₹ 7,604 ₹ 6,909 ₹ 6,420
15 Lacs ₹ 20,925 ₹ 17,147 ₹ 13,191 ₹ 11,405 ₹ 10,364 ₹ 9,629
20 Lacs ₹ 39,367 ₹ 22,863 ₹ 17,587 ₹ 15,207 ₹ 13,818 ₹ 12,839
30 Lacs ₹ 59.050 ₹ 34.249 ₹ 26.381 ₹ 22.811 ₹ 20.727 ₹ 19.259

Rate Of Interest @6.70%.

Bank Monthly EMI For ₹ 10 Lakh Lowest Rate
SBI Home Loan EMI Calculator ₹ 6,453 6.70%
HDFC Home Loan EMI Calculator ₹ 6,486 6.75%
Citibank Home Loan EMI Calculator ₹ 6,909 6.75%
Bank of Baroda Home Loan EMI Calculator ₹ 6,486 6.70%
ICICI Bank Home Loan EMI Calculator ₹ 6,486 6.70%

What Factors Affect Your Home Loan EMI?

When calculating your EMI, the calculator includes all the parameters that impact it. Let’s take a look at the various factors that impact your monthly repayments:

1. Principal: The principal is the loan amount you initially borrow from the lender. It is directly proportional to your EMI. Higher the loan amount, higher the EMI.

2. Interest Rate: The interest rate is what you pay for borrowing the loan. In short, it shows you the cost of your loan. It differs from one bank to another. The higher the interest rate, the higher the EMI will be. Finding a lender that offers you the lowest interest rates can help you lower your EMIs. The lower the interest rate, the lower the total cost of your loan will be.

3. Tenure: The time you take to repay the amount you borrow is called tenure or the period of the loan. The tenure is inversely proportional to your EMI. The longer the loan tenure, the lower your EMI. The loan tenure is determined based on your age at the time of borrowing and your retirement age. The longest loan tenure offered banks in India is ₹30 year.

4. Processing Fee: This value is a percentage of your loan amount or a minimum or maximum fee decided by the lender. It is the fee that the bank charges to process your loan application. You can know about this amount from your loan documents. At least a part of this fee will be payable at the time of application. And your lender may not refund this amount even if your application is rejected.

5. Prepayments: As mentioned earlier, making prepayments on your property loan can help you reduce the outstanding principal. This, in turn, reduces your interest charges. And both together contribute to reducing your EMIs if you prefer to keep the tenure constant.

What are the Tax Benefits of Paying Home Loan EMIs?

Taking a loan to buy a house can be expensive, but it also has certain benefits, especially when it comes to taxes. The government offers Tax reliefs via the Income Tax Act, 1961 on the EMIs you pay every year. These are as follows:

1. Section 80C: You can claim a tax deduction of up to ₹ 1.5 lakh every year on the principal amounts paid towards your property loan.

2. Section 24: Under this section, you can claim a deduction of up to ₹ 2 lakh on the interest component you pay each year.

3. Section 80EE: Under this section, you can claim an additional interest amount of up to ₹ 50,000 per year. This is over and above the amounts mentioned in Sections 80C and 24. This deduction is subject to certain terms and conditions.