What is Home Loan EMI?
A Home Loan EMI (Equated Monthly Instalment) is the fixed amount a borrower pays to the lender each month to repay a home loan. Each EMI comprises a portion of the principal amount (the money you borrowed) and a portion of the interest payable on that amount.
A home loan EMI is the fixed amount you, as a borrower, pay to the bank or lender every month to repay the home loan. This payment includes two parts:
- One portion goes towards repaying the loan amount you borrowed (called the principal)
and - The other portion covers the interest charged by the lender on that loan
Please note that the EMI remains the same each month throughout the loan period. The main factors that decide your EMI are:
- Total loan amount
- Interest rate charged by the lender
- The time you choose to repay the loan (called the loan tenure).
Usually, lenders calculate EMI using a standard formula. The calculation is done in a way that you could repay the entire loan in fixed monthly payments over your tenure.
Please note that:
- At the beginning of the loan, a larger part of the EMI goes towards interest
and - A smaller part reduces the principal
Gradually, the interest portion becomes smaller, and more of your payment goes towards the principal.
By knowing your EMI, you can smartly plan your monthly budget. Also, it lets you understand how much you need to pay every month and whether you can afford that payment. You can even use an EMI calculator available on many financial websites to estimate this amount.
Want to know more? In this article, we will explain everything related to home loan EMIs.
Key points about home loan EMI
Through a home loan EMI, you can repay both the loan amount and the interest charged by the bank in a structured way. Below are some main things you should know about how EMI works:
1. Fixed monthly payment
Your EMI stays the same every month during the entire loan period. This makes it easier for you to plan your monthly expenses because you know in advance how much you need to pay each month.
2. Covers principal and interest
Each EMI includes two parts:
- One part pays off the principal (the amount you borrowed)
and - The other part pays the interest on the remaining loan amount
In the early years, the interest portion is higher. Gradually, the principal part becomes larger.
3. Based on the loan tenure
EMIs are spread out over the loan tenure, which is usually between 10 and 30 years. A longer tenure means smaller EMIs. However, it also means you are paying more interest in total.
On the other hand, a shorter tenure means higher EMIs but less total interest.
4. Depends on key factors
Three main things decide your EMI:
- Loan amount: The more you borrow, the higher your EMI.
- Interest rate: A higher rate increases your EMI.
- Loan tenure: A longer tenure reduces EMI but increases total interest paid
5. Use of EMI calculators
Before taking a loan, you can use online EMI calculators. Through these tools, you can estimate how much EMI you will have to pay based on the:
- Loan amount
- Interest rate
- Tenure
Factors that determine home loan EMI
When you take a home loan, the amount you pay every month as EMI depends on a few important factors. Generally, these are:
- The amount you borrow
- The interest rate charged by the lender
- How long you have chosen to repay the loan
Let us understand these three major factors in detail:
1. Principal amount
This is the amount you borrow from the bank or lender to buy a home. If you borrow a larger amount, your EMI will also be higher.
For example:
- Say you borrow Rs. 40 lakh instead of Rs. 30 lakh.
- Now, your monthly EMI will increase.
To keep your EMI low, you can make a bigger down payment and borrow a smaller amount.
2. Interest rate
This is the percentage the lender charges on the loan amount. A higher interest rate means a higher EMI.
For example:
- Say the rate is 9% instead of 7%.
- Now, you will pay more every month.
Usually, your interest rate depends on your:
- Credit score
- Income levels
- Repayment record
If you have a good credit history and stable income, you may get a lower interest rate.
3. Loan tenure
This is the number of years you choose to repay the loan. A longer tenure (like 25–30 years) gives you smaller EMIs, but you will pay more total interest over time.
Whereas, a shorter tenure (like 10–15 years) means higher EMIs, but you will save on total interest.
Ideally, you should choose a tenure that keeps your EMI affordable, as this will reduce the chances of default.
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.
Planning to buy your dream home? Bajaj Finserv offers competitive rates starting from 7.49%* p.a and flexible tenures up to 32 years. Check your eligibility for a home loan today. You may already be eligible, find out by entering your mobile number and OTP.
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. Ready to take the next step towards homeownership? Check your loan offers with Bajaj Finserv today. You may already be eligible, find out by entering your mobile number and OTP.
When do home loan EMI payments start?
The EMI on a home loan usually starts after the bank or lender gives you the full loan amount. However, the exact start date depends on how and when the loan is disbursed. Let’s have a look at common situations you may face:
1. Loan given in parts (partial disbursement)
If you buy an under-construction property, the lender may disburse the loan amount in stages as the construction progresses. In this case, your regular EMI does not begin right away.
Instead, you pay pre-EMI interest on the amount disbursed. This pre-EMI is only the interest on the partial amount released. Do not confuse it with the full EMI that includes both principal and interest.
Mostly, regular EMI payments begin only after the full loan amount is disbursed.
2. Loan for a ready-to-move property
If you are buying a fully built, ready-to-move-in property, the entire loan amount is disbursed at once. In this case, EMI payments usually start from the next month after the disbursement date.
Generally, the bank informs you of the exact date when your first EMI is due.
Important Note:
- Once EMI payments begin, you must pay them every month on time.
- Missing EMIs can:
- Lead to penalties
- Damage your credit score
- Lead to legal action
- To avoid missing EMIs, plan your budget carefully.
- You can also use online EMI calculators to:
- Estimate your future payments
and - Choose a loan structure that suits your income
- Estimate your future payments
With proper planning, you can secure a home loan that fits your budget perfectly. Bajaj Finserv offers home loans up to Rs. 15 Crore* with EMIs starting as low as Rs. 687/lakh*. Check your eligibility now. You may already be eligible, find out by entering your mobile number and OTP.
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 authorise the transaction through the payment gateway.
Important Links: What is Home Loan | Home Loan Interest Rates | Home Loan Eligibility Criteria | Documents Required for Home Loan | Home Loan Balance Transfer | Joint Home Loan | Home Loan Tax Benefits | Home Loan Subsidy | Housing Loan Top Up | Rural Home Loans | Home Loan Process | Down Payment for Home Loan | Pre-approved Home Loan | Rural Home Loan | Home Loan Tenure
Conclusion
A home loan EMI is a fixed monthly payment you make to repay your loan. It includes both the principal amount and interest. Be aware that your EMI depends on:
- Loan amount
- Interest rate
- The loan tenure you choose
The EMI remains the same every month. You may start paying EMI immediately or after full disbursement, depending on the property type. Usually, for under-construction properties, you first pay only pre-EMI interest.
Furthermore, always try to pay your EMI on time. This lets you avoid penalties and damage to your credit score.
Now that you understand home loan EMIs, you can make an informed decision about your home purchase. Bajaj Finserv offers transparent pricing with no hidden charges and flexible repayment options. Check your loan offers with Bajaj Finserv today. You may already be eligible, find out by entering your mobile number and OTP.
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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.
The EMI for a Rs. 20 lakh home loan depends on:
- The interest rate
and - The loan tenure
If you take the loan for 10 years at 9% interest, your monthly EMI will be about Rs. 25,335. Whereas, if you choose a longer term like 25 years, your EMI will be lower, around Rs. 16,443.
However, always remember that with a longer tenure, you will end up paying more total interest.
A Rs. 10 lakh home loan EMI depends on the interest rate and loan tenure. For example,
- Say you take a 20-year loan at 8.50% interest.
- Now, the EMI will be around Rs. 8,678 (as per Bajaj Finserv)
If the interest rate is slightly lower or you choose a different bank, the EMI could range between Rs. 8,000 and Rs. 12,000.
For a Rs. 50 lakh home loan, the EMI calculations are based on the loan duration and interest rate. Let’s see how:
- If you take the loan for 20 years at 8.45% interest, the EMI will be about Rs. 43,233.
- Whereas, if the tenure is only 10 years, the EMI increases to around Rs. 61,859.
Please note that shorter tenure means higher monthly payments but lower total interest. On the other hand, longer tenure gives smaller EMIs but increases your total repayment amount.
If you take a Rs. 1.5 crore home loan, your EMI will depend on how many years you choose to repay it and the interest rate.
For example:
- At 8.45% interest for 20 years, your EMI would be around Rs. 1,29,699 per month.
- If you choose a longer period like 30 years, EMI will be lower, around Rs. 1,20,279.
- But with a short term like 10 years, EMI becomes high and you have to pay about Rs. 1,85,578 per month.
For a Rs. 30 lakh home loan, EMI depends on your loan tenure and interest rate. For example,
- With a 20-year repayment period at 8.5% interest, your EMI will be around Rs. 29,454 per month.
- If you go for a shorter term like 10 years, EMI will be higher, around Rs. 37,116 per month.
You must realise that shorter tenure leads to higher monthly payments but less total interest paid. In contrast, longer tenure leads to smaller EMIs but more total interest.
If your monthly salary is Rs. 60,000, banks may offer you a home loan between Rs. 35 lakh and Rs. 50 lakh. This depends on factors like your:
- Credit score
- Age
- Existing EMIs
- Job stability
Most lenders usually allow up to 40–50% of your salary for EMIs. So, if you don’t have other loans, you can qualify for a higher loan amount. Furthermore, a clean repayment record also lets you secure a better deal.
The EMI for a Rs. 20 lakh home loan depends on:
- The interest rate
and - The loan tenure
If you take the loan for 10 years at 9% interest, your monthly EMI will be about Rs. 25,335. Whereas, if you choose a longer term like 25 years, your EMI will be lower, around Rs. 16,784.
However, always remember that with a longer tenure, you will end up paying more total interest.
A Rs. 10 lakh home loan EMI depends on the interest rate and loan tenure. For example, say you take a 20-year loan at 8.50% interest, the EMI will be around Rs. 8,678 with Bajaj Finserv.
If the interest rate is slightly lower or you choose a different bank, the EMI could range between Rs. 8,000 and Rs. 12,000.
For a Rs. 50 lakh home loan, the EMI calculations are based on the loan duration and interest rate. Let’s see how:
If you take the loan for 20 years at 8.45% interest, the EMI will be about Rs. 43,233.
Whereas, if the tenure is only 10 years, the EMI increases to around Rs. 61,859.
Please note that shorter tenure means higher monthly payments but lower total interest. On the other hand, longer tenure gives smaller EMIs but increases your total repayment amount.
Whether EMI is good or bad depends on how you manage it. If you borrow for important needs like a house or education, and the EMI fits your monthly budget, it is helpful. It allows you to own or use something now and pay in parts over time.
However, if you take too many loans or buy things you don’t need, EMIs can become a burden. Missing EMI payments hurt your credit score and cause financial stress.
If you take a Rs. 1.5 crore home loan, your EMI will depend on how many years you choose to repay it and the interest rate.
For example:
- At 8.45% interest for 20 years, your EMI would be around Rs. 1,29,699 per month.
- If you choose a longer period like 30 years, EMI will be lower, around Rs. 1,14,806.
- But with a short term like 10 years, EMI becomes high and you have to pay about Rs. 1,85,578 per month.
Ready to explore your options? Bajaj Finserv offers competitive rates and quick approvals. Check your eligibility today. You may already be eligible, find out by entering your mobile number and OTP.
For a Rs. 30 lakh home loan, EMI depends on your loan tenure and interest rate. For example,
- With a 20-year repayment period at 8.5% interest, your EMI will be around Rs. 26,035 per month.
- If you go for a shorter term like 10 years, EMI will be higher, around Rs. 37,196 per month.
You must realise that shorter tenure leads to higher monthly payments but less total interest paid. In contrast, longer tenure leads to smaller EMIs but more total interest.
If your monthly salary is Rs. 60,000, banks may offer you a home loan between Rs. 35 lakh and Rs. 50 lakh. This depends on factors like your:
- Credit score
- Age
- Existing EMIs
- Job stability
Most lenders usually allow up to 40–50% of your salary for EMIs. So, if you don’t have other loans, you can qualify for a higher loan amount. Furthermore, a clean repayment record also lets you secure a better deal.
Want to know exactly how much you can borrow? Bajaj Finserv offers personalised loan amounts based on your profile, with loans up to Rs. 15 Crore* available for eligible applicants. Check your loan offers with Bajaj Finserv now. You may already be eligible, find out by entering your mobile number and OTP.
