Most of us dream about owning a home, the ultimate embodiment of personal and financial stability. However, with inflating real estate rices, it may become tough to accumulate the entire required sum for this. Luckily, financial institutions like Bajaj Finance can provide the aid you need in the form of home loans. For example, you might consider a ₹5 lakh home loan. If you opt for a home loan of this size, you will need to make monthly payments, or equated monthly instalments (EMIs), to repay both principal and interest components.
In this article, we will dive down into understanding ₹5 lakh Home Loan EMIs, including its calculation, varying tenures, eligibility requirements, required documents, and the features & benefits of this type of loan. The goal is to help you make a well-informed decision on whether this loan amount suits your requirements and repayment capacity.
Rs. 5 lakh Home Loan EMI Calculator
Before diving in, it is crucial to understand what an EMI is. The equated monthly instalment, or EMI, is the fixed payment a borrower pays to the lender at a specified date every month for a specific period. An EMI includes the repayment of the principal amount and the payment of the interest on the outstanding amount of your home loan.
An home loan EMI calculator is a helpful tool that establishes a good estimate of the potential EMI that needs to be repaid to the lender. It incorporates the loan amount, tenure, and the applicable interest rate. With sources like Bajaj Finserv, you can calculate Rs. 5 lakh home loan EMI effortlessly within a second.
Rs. 5 lakh Home Loan EMI with varying tenure and interest rate of 10%
The amount of EMI will mainly depend on three aspects: the loan amount, the rate of interest, and the loan tenure. A ₹5 lakh home loan garnered at a 10% interest rate over an array of different loan tenures would equate to the following EMIs:
- Rs. 5 lakh home loan EMI for 5 years would amount to approximately Rs. 10,624 per month.
- Rs. 5 lakh home loan EMI for 10 years would total around Rs. 6,608 per month.
- Rs. 5 lakh home loan EMI for 15 years would be around Rs. 5,374 per month.
- Rs. 5 lakh home loan EMI for 20 years would stand at Rs. 4,825 per month.
- Rs. 5 lakh home loan EMI for 25 years would be approximately Rs. 4,501 per month.
- Rs. 5 lakh home loan EMI for 30 years would rate at about Rs. 4,272 per month.
As can be seen, with longer tenures, the monthly EMI reduces, but therein you are paying more interest overall. This insight enables you to select a suitable tenure.
How to calculate 5 lakh Home Loan EMI?
You can use an online EMI calculator to calculate your ₹5 lakh home loan EMI quickly and accurately. All you need to do is insert the loan amount, interest rate, and tenure of the loan. The calculator will furnish the monthly EMI you need to pay. It is important to remember that the above figures are just illustrative, and actual amounts may vary slightly depending on the exact interest rate and other charges levied by your lender.
However, for those curious minds, the mathematical formula for EMI calculation is:
EMI = (P × R × (1+R)^N)/((1+R)^N – 1)
Where,
P = Principal amount (i.e. INR 5,00,000)
R = Monthly interest rate (i.e. 10%/12 = 0.00833)
N = Loan tenure or the number of monthly instalments (i.e. 240 for 20 years, 180 for 15 years, and 120 for 10 years)
This equation, though, might prove complex for some - so, it is more effortless and convenient to use an online EMI calculator.
Eligibility requirements & documents required for a Rs. 5 lakh Home Loan
Both salaried and self-employed individuals can apply for home loans. However, every bank has different eligibility criteria. Generally, the following are the same across banks:
- Age: You should be 18-70 years.
- Income: Your income should facilitate the EMI payments.
- Employment stability: If salaried, you should have at least two years of employment, with a year at the current position. If self-employed, you should have been in business for a minimum of 5 years.
The documents needed for availing a home loan comprise:
- Duly filled home loan application form with photograph.
- Identity proof.
- Address proof.
- Proof of income.
- Bank statement for the previous six months.
- Property papers.
This list offers general guidance, but lenders may request additional documents depending on their policies and your unique circumstances.
Features and benefits - Rs. 5 lakh Home Loan EMI
With a Rs. 5 lakh home loan, you can obtain a good sum to mitigate your housing requirements without putting a strain on your financial conditions.
Key features may include loan tenure ranging from 1 to 25 years, options for a floating or fixed interest rate, and options for different types of home loans available (like home purchase loans, home improvement loans, land purchase loans, etc.)
The benefits are manifold:
- Capital acquisition: A home loan grants you instant capital required for possessing your dream home.
- Tax benefits: As per the Indian tax rules, you are eligible for tax deductions.
- Improves credit score: A home loan can raise your credit score when you make your EMI payments well timed and regularly.
Tips to manage Rs. 5 lakh Home Loan EMI efficiently
Managing the loan EMIs with precision is very critical to avoid debt traps. Here are a few tips:
- Choose an EMI amount that does not exceed 40% to 50% of your monthly income.
- Maintain a steady stream of income to pay off your loans effectively.
- Keep an emergency fund that can cover at least three months' worth of EMIs to tackle any unforeseen circumstance.
- Plan your finances; keep a budget in check.
Bajaj Finserv integrates smooth and efficient services to provide affordable home loan and repayment process. For more details, always consult financial advisers or professionals in the field before jumping into any major financial decisions.
