EMI Calculator

How the number is worked out#

An equated monthly instalment is the fixed payment that clears both principal and interest by the end of the tenure:

EMI = P × i × (1 + i)^n ÷ [(1 + i)^n − 1]

Where P is the loan amount, i is the monthly rate (annual rate ÷ 12 ÷ 100) and n is the number of months. Every bank in India uses this formula. If your sanction letter shows a different EMI, the difference is in the inputs — a processing fee financed into the principal, or insurance bundled in — not the arithmetic.

A worked example#

₹10,00,000 at 9% over ten years:

Over ten years you repay 152% of what you borrowed. That ratio is the number worth looking at, and it is the one loan advertising never puts on the billboard.

Where the interest actually goes#

The EMI is flat but its composition is not. In the first month of the loan above, ₹7,500 of the ₹12,668 is interest and only ₹5,168 reduces the principal. By the final year that has inverted. Three consequences follow:

• Prepaying early is worth far more than prepaying late. A lump sum in year two removes interest that would have accrued for eight more years. The same lump sum in year nine removes almost nothing.
• Shortening the tenure beats reducing the EMI. When you prepay, banks will offer either. Keeping the EMI and cutting the tenure saves multiples of what cutting the EMI saves.
• A longer tenure is a much worse deal than the EMI suggests. Stretch the loan above to twenty years and the EMI falls to ₹8,997 — attractive — while total interest rises to ₹11,59,342, more than double.

What this does not include#

Floating rates. Most Indian home loans are linked to an external benchmark, usually the repo rate, and reset periodically. When the benchmark moves, banks typically hold the EMI and change the tenure instead — which is why a rate rise can silently add years to a loan. This calculator assumes the rate holds for the whole term.

Fees. Processing charges of 0.25% to 1%, legal and valuation fees, stamp duty on the mortgage, and any bundled insurance premium sit outside the EMI but inside the cost.

Moratorium and pre-EMI. On an under-construction property you may pay interest only until possession. That interest is real and does not reduce the principal.

Questions#

Can I reduce my EMI by extending the tenure?#

Yes, and it is usually a poor trade. The table above shows a ₹3,671 monthly saving costing ₹6,39,233 in extra interest. Extending tenure makes sense when cash flow is genuinely tight, not as a default.

Does part-prepayment attract a charge?#

On floating-rate home loans to individuals, the RBI does not permit foreclosure or prepayment penalties. Fixed-rate loans, and most personal and auto loans, may carry one — check the sanction letter before you plan around it.

What EMI can I actually afford?#

Lenders generally cap total EMIs at 50% to 60% of net monthly income, and that is a ceiling rather than a target. Work backwards from what you can pay while still saving: run the SIP calculator on the difference and see what the smaller loan buys you.