# Home Loan EMI Calculator

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## What is Home Loan EMI ?

A home loan EMI is the monthly amount you pay towards repaying a home loan. EMI is an acronym for equated monthly instalments. For instance, if you have taken a home loan of Rs 10, 00,000 for 240 months and we ask you to pay Rs 10,000 per month towards repayment of loan then the Rs 10,000 that you pay every month for 240 months is the EMI.

## How to calculate Home Loan EMI ?

Calculation of home loan EMI is a function of three variables. The variables are the amount of loan, the home loan interest rate charged and the tenure of the loan. Since we are making the repayment in equated monthly instalments the EMI is calculated on a monthly reducing balance method. The calculation is simple but involves 240 calculations for 240-month loan tenure. In order to make calculations easier, we provide you with an EMI calculator which will do the calculations quickly in a fraction of a second.

To explain the concept of EMI and how it changes when there is a change in any of the three variables we consider the following illustrations

Scenario 1

Amount of home loan Rs 10, 00,000

Tenure 240 months

Interest 10%

When you input these values into the EMI calculator you get an EMI of Rs 9746.72

Scenario 2

Here we change only one parameter, that is, interest from 10% to 9%

Amount of loan Rs 10, 00,000

Tenure 240 months

Interest 9%

When you input these new values into the EMI calculator you get an EMI of Rs 9087.23. It is seen that the EMI has reduced from Scenario 1 as a direct result of reducing the interest rate.

Scenario 3

Here we change the tenure of Scenario 1 from 240 months to 180 months

Amount of loan Rs 10, 00,000

Tenure 180 months

Interest 10%

When you input these new values into the EMI calculator you get an EMI of Rs 10853.51. It is seen that the EMI has increased from Scenario 1 as a direct result of reducing the tenure.

Scenario 4

Here we change the housing loan amount from Rs 10, 00,000 to 15, 00,000

Amount of loan Rs 15, 00,000

Tenure 240 months

Interest 10%

When you input these new values into the home loan EMI calculator you get an EMI of Rs 14571.83. It is seen that the EMI has increased from Scenario 1 as a direct result of increasing the loan amount.

Thus, from the above four scenarios, we can infer that the EMI is a function of the loan amount, interest rate and tenure. Since the interplay of these three variables is difficult to calculate manually the EMI calculator helps to do the calculations in a trice.

## Why should one calculate Home Loan EMI through Tata Capital ?

It is easy to use the home loan EMI calculator to iterate the many combinations possible so as to decide on the most comfortable EMI for you. For instance, if you are a young borrower, then a longer tenure would be possible. You could check the EMI by changing the tenure and deciding on an EMI that you can afford.

## What is the impact of part payments on EMI ?

At Tata Capital, we have a facility whereby you can prepay partially. The effect of partial prepayment is to

• Reduce the home loan tenure
• Reduce the principal balance outstanding
• Pay lesser overall interest

## How does Home Loan EMI payment reduce tax obligation ?

One of the many advantages of taking a home loan is the tax benefits available to the borrower. Since the EMI payment is split up into a principal repayment component and an interest payment component the borrower gains on tax from these payments.

The tax benefits are as follows

• Principal repayment including part prepayment component of the EMI qualifies for tax benefits under Section 80C of the IT Act
• Payment of interest component of the EMI qualifies for tax benefits under Section 24 of the IT Act
• Payment of interest component of the EMI qualifies for tax benefits under Section 80EE of the It Act over and above under Section 24 for first time buyers

There are rules under which these benefits are available and the IT Act is the authority that decides these benefits which may change as per the provisions under the IT Act.

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