What is Home Loan EMI?
EMI (Equated Monthly Instalment) is the monthly payment you make to repay your home loan. Each home loan EMI is made of interest and principal components of varying ratios. If you take a home loan, you’ll pay a part of the principal and interest due every month until the entire loan is cleared in full.
Formula for calculating Home Loan EMI:
Lenders generally use the following Home loan EMI calculation formula:
EMI = [P x I x (1+I)N] / [(1+I)N-1]
Where,
P – The principal i.e. loan amount
I – The interest rate per month
N – Number of instalments
How to calculate Home Loan EMI?
1. Substitute the loan amount, interest rate per month, and number of instalments in the above formula
2. The interest rate per month is calculated by dividing the interest rate per annum by 12
3. Calculate carefully to derive the EMI
Example:
Say you require a home loan of Rs.25 lakh for a period of 10 years at an interest rate of 9.5% p.a.; your EMI can be calculated as:
Here,
P = Rs.25,00,000
I = 9.5 / (12 x 100) = 0.0079
N = 10 years = 120 months
EMI = [25,00,000 x 0.0079 x (1+0.0079)120 / (1+0.0079)120 -1 = Rs.32329*
*This value does not include the processing fee
Alternatively, you can use our home loan EMI calculator to derive your EMIs in a few moments. All you have to do is input the principal, interest rate, and tenor into the digital calculator to view the EMI value.
What are the benefits of Home Loan EMI?
Home Loan EMIs offer several advantages, making them a popular choice for managing home financing:
- Fixed monthly payments: EMIs ensure consistent, fixed payments each month, aiding in better financial planning and budgeting.
- Ease of financial management: Regular, manageable payments help spread the financial burden over the loan tenure, avoiding large lump-sum payments.
- Predictable costs: Fixed EMIs make it easier to track and anticipate your expenses, offering stability in financial planning.
- Credit building: Timely EMI payments can enhance your credit score, benefiting future borrowing opportunities.
Opting for a Bajaj Finserv Home Loan can further streamline your financing process with convenient EMI options and competitive rates.
How to pay home loan EMI online?
You can conveniently pay your overdue Bajaj Finserv payment online using two methods:
- Customer portal: Log in to the Bajaj Finserv dedicated customer portal using your credentials and make the payment online.
- My Account App: Download the app and follow these simple steps:
- Log in with your registered mobile number and details.
- Select ‘Account Information’ and then ‘Online Payment.’
- Choose the ‘EMI and Overdue Payment’ option.
- Enter your payment details and authorize the transaction through the payment gateway.
Frequently asked questions
Yes, you can prepay your home loan EMI, either partially or fully, depending on your lender's policy. Prepaying reduces the outstanding principal, which can lower future EMIs or shorten the loan tenure, helping you save on interest costs.
Yes, extending the loan tenure reduces the monthly EMI, as the repayment amount is spread over a longer period. However, this may increase the total interest paid over the loan’s lifetime. Ensure you balance affordability with long-term financial impact.
A higher loan amount directly increases the EMI, as it determines the principal on which interest is calculated. Conversely, opting for a lower loan amount reduces the EMI, making repayment more manageable. Loan tenure and interest rates also influence the EMI.
Skipping an EMI is generally not allowed, but some lenders may offer a temporary moratorium during financial difficulties. You must inform your lender, as missing payments without notice can lead to penalties, a higher interest burden, or a negative impact on your credit score.
