Recalculate your Home Loan EMI and Total Interest Due in a snap!
Monthly amount paid to your Home Loan provider
Your debt repayment schedule in regular instalments over a period of time.
|Year||Principal Paid(A)||Interest Paid(B)||Total Payment (A+B)||Outstanding Loan Balance||Pre-payment|
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Read on to learn how you can figure out the functionality of the different loan parameters and what role they specifically play in your loan repayment pattern. BankBazaar.com’s EMI calculator is a fantastic tool that can help you manage the various loan parameters to become debt free in the most efficient manner possible.
Top picks from our Financial Expert
Home loans, in essence, are advances taken from financial institutions to fund the purchase of a residential property. In India, banks are the most popular...
Home loan interest rates are offered either on a fixed or floating rate basis or a hybrid of fixed and floating rates.Floating rate home loans are those ...
Home loans are repayable in fixed installments over the loan period. These installments are called EMIs (Equated Monthly Installments).Borrowers have to ...
Home loans, in essence, are advances taken from financial institutions to fund the purchase of a residential property. In India, banks are the most popular financiers of homes. With growing demand for real estate in India, basic home loan products have been tweaked resulting in variants that suit diverse individual needs.
Home loan products offered in India
They are categorised according to the purpose they are availed for. Home loans are commonly offered:
Other variants of home loans are:
Home loan interest rates are offered either on a fixed or floating rate basis or a hybrid of fixed and floating rates.
Floating rate home loans are those where the interest rate is pegged to the bank’s lending rate. The interest rate can change over the tenure of the loan. Most home loans in India are disbursed on the basis of floating interest rates.
Fixed rate home loans are those where the interest rate remains fixed over the tenor of the loan. These are not popular and are opted for when rates are expected to rise in the foreseeable future. Fixed rate home loans often come with a reset clause i.e. the rate can be revised upwards or downwards or converted to floating rates after a specific number of years.
Hybrid rate home loans are those where the loan is structured such that fixed rates and floating rates apply during different times during the loan period.
Home loan rates of some of the leading banks in India have been tabulated below. Interest rate trends can be gauged by changes made by these banks.
|Bank Name||Home Loan Interest Rate|
|State Bank of India (SBI)|| All: 10.15%
Maxgain: Rs.1 crore and > - 10.40%
Women: 0.05% less than existing rates
|ICICI Bank (SBI)|| Salaried:
Floating: 10.15% - 10.25%
Fixed, 1 or 2 yrs.: < Rs.75 lakhs - 10.15%
Rs.75 lakhs - Rs.5 crores - 10.50%
Fixed, 10 yrs: < Rs.1.5 crores - 10.25%
Rs.1.5 crores to Rs.5 crores - 10.40%
Rs.5 crores and > - 10.50%
Floating: < Rs. 75 lakhs - 10.15%
Rs.75 lakhs and > - 10.35% - 11.00%
Fixed, 1 or 2 yrs.: < Rs.75 lakhs - 10.25%
Rs.75 lakhs to Rs.3 crores - 10.50%
Rs.3 crores to Rs.5 crores - 11%
Fixed, 10 yrs: Below Rs.1.5 crores - 10.25%
Rs.1.5 crores to Rs.5 crores - 10.40%
Rs.5 crores and > - 10.50%
Below Rs.75 lakhs: Floating - 10.10%; Fixed - 10.20%
|Punjab National Bank (PNB)|| Floating: < Rs.75 lakhs - 10.25%
Rs.75 lakhs and > - 10.50%
Fixed: < Rs.75 lakhs - 10.75%
Rs.75 lakhs and > - 11%
Flexible - OD: < Rs.75 lakhs - 10.25%
Rs75 lakhs and > - 10.50%
(+0.50% on existing rates for 3rd house onwards)
|Bank of Baroda (BOB)||Floating, 5 to 30 yrs.: 10.25%|
|Canara Bank|| All
< Rs.75 lakhs - 10.20%
Rs.75 lakhs and > - 10.45%
|Bank of India (BOI)|| Star Home: < Rs.75 lakhs - 10.20%
Rs.75 lakhs and > - 10.45%
Star Diamond: Rs.5 crores and > - 10.45%
Star Smart: < Rs.1 crore - at Star Home rates
Rs.1 crore and > - 0.25% over Star Home
|HDFC Bank|| Self-employed/Non-professionals:
< Rs.75 lakhs - 10.15% to 10.65%
Rs.75 lakhs and > - 1025% to 10.75%
Floating: < Rs.30 lakhs - 10.50% to 11%
Rs.30 lakhs and > - 10.75% to 11.75%
Floating: 10.15% to 10.65% (limited offer)
TruFixed Plus, fixed 2 yrs. (limited offer):
< Rs.30 lakhs - 10.25% to 10.75%
Rs.30 lakhs to Rs.75 lakhs - 10.50% to 11%
Rs.75 lakhs and > - 10.50% to 11%
TruFixed Plus, fixed 3 yrs. (limited offer):
< Rs.30 lakhs - 10.75% to 11.25%
Rs.30 lakhs to Rs.75 lakhs - 10.75% to 11.25%
Rs.75 lakhs and > - 11% to 11.50%
|Standard Chartered Bank (SCB)||Up to Rs.10 crores: 10.15% upwards|
|IDBI Bank|| Home Loan (floating): 10.25%
Home Loan (fixed): < Rs.30 lakhs - 10.75%
Rs.30 lakhs and > - 11%
Home Loan Interest Saver (floating): 10.40%
|Axis Bank|| Salaried: < Rs.75 lakhs - 10.15%
Rs.75 lakhs and > - 10.40%
Self-employed: < Rs.25 lakhs - 10.40%
Rs.25 lakhs and > - 10.90%
Home loans are repayable in fixed installments over the loan period. These installments are called EMIs (Equated Monthly Installments).
Borrowers have to repay the principal as well as the interest on the loan. Every month, a part of the principal and interest due is repaid until the entire loan is cleared in full.
Although the EMI (i.e. monthly principal and interest payments) remains the same every month, the ratio of principal to interest payments changes. Initially, interest payments are high but as time progresses, interest payments reduce and EMIs comprise mostly principal payments.
This is because most banks use the monthly reducing balance method whereby interest is calculated on the balance outstanding at the end of every month i.e. interest is not charged on amounts already repaid.
P = Principal; i = interest rate (monthly i.e. annual rate divided by 12); n = loan period (in months i.e. loan period divided by 12)
Using the above formula and considering a loan of Rs. 10 lakhs @ 10% p.a. for a period of 5 years, the EMI = Rs.21,247.
This is payable over a period of 60 months i.e. 5 years / 12.
The amortization table below shows the loan repayment schedule.
It depicts how the EMI = Rs.21,247 is split between interest and principal payments. The balance outstanding reduces every month thereby reducing interest due.
|Month||Opening Balance||Principal Repaid||Interest Paid||Outstanding Balance|
These are online tools that borrowers can use to calculate their home loan EMIs by inputting data pertaining to the loan amount, tenure and interest rate.
It is useful for quick calculations to assess monthly outflows, make comparisons between home loan schemes, before applying to a bank, and on existing loans, in case of refinancing.
Banks are bound to assess borrowers, applying for a home loan, based on their creditworthiness.
Determining whether a borrower is eligible for a home loan depends on a number of factors, all of which go to showing whether the borrower can repay the loan, completely and in a timely manner, over the entire loan period.
Maintain or improve credit scores by utilising debt responsibly and making timely repayments, in full. Banks commonly prefer a CIBIL score ranging between 750 and 900 points. Checking scores before applying for a loan provides opportunities to improve a bad score. (This includes credit card usage).
Display a good repayment record on past loans/credit cards to increase financial credibility when applying for a fresh home loan.
Reduce financial obligations by clearing outstanding debt. Banks are more confident disbursing loans to borrowers who don’t have other loans to service.
Include a co-applicant e.g. a spouse to enhance income levels. Loan amounts are usually sanctioned up to 50% of the borrower’s income.
Include all components of primary income when declaring earnings e.g. bonus, perks etc. in addition to basic salary and other/alternative sources of income e.g. rental income. This gives a broader view of income levels, positively influencing a bank’s outlook on earning capacity.
Build / leverage on existing relationships with the bank as a customer. Banks are more likely to approve loans of customers who have dealt satisfactorily with them in the past since they feel they already know the borrower. It is also one way for the bank to retain customers and build goodwill.
Show sufficient funds to make a down-payment. The LTV ratio offered by most banks ranges between 70% to 80%. The balance, usually the down-
payment, has to be borne by the borrower. Alternatively, investing in a less expensive property will reduce the loan requirement. Banks tighten their approval processes for large loan amounts.
Opt for a long-term loan. Longer tenures bring down EMIs since the amount to be repaid is spread over many months/years. Lower EMIs mean less strain on income which in turn strengthens repayment capabilities.
Highlight positive personal attributes e.g. good educational qualifications, few dependents, good health, strong history of savings/money management, residential stability etc. A stable borrower is unlikely to default on repayments. Also, a borrower with fewer dependents has fewer personal financial obligations.
Opt for loans that offer repayment flexibility e.g. staggered repayment schedules wherein interest charged is lower during the initial part of the loan period and higher during the latter. Banks may accommodate borrowers on this basis based on proven potential for higher incomes in the foreseeable future.
Invest in quality properties. Banks tend to qualify borrowers who plan to invest the funds obtained through a home loan in high-quality properties. This is because the property so funded is usually mortgaged to the bank as security.
Offer additional collateral by pledging physical assets such as existing property, investment instruments like shares or term insurance to get a positive risk rating. Alternatively, appoint a guarantor.
Apply while still young. Most banks require home loans to be repaid before the borrower retires. Applying for a home loan late in life limits the loan period. This increases EMIs since the option to stretch payments over a longer tenure is not available.
If you are paying a hefty EMI for a home loan then you finally have a reason to celebrate because home loan EMI’s are set to reduce as base rates are reduced by lenders. The Chairman of SBI, Arundhati Bhattacharya confirmed the news and said that this could be the start of a trend in easing rates.
Analysts say that, over the next 12 months, repo rates might reduce by as much as 1%, which would translate into monthly savings of upto Rs. 3,000 to Rs. 4,000. They have also said that, with the crash in prices of commodities globally, inflation is expected to remain low for some time to come, which in turn will bring down the interest rates for home loans.
This reduction in base rates is also set to make a difference to other loans taken for bikes, TV’s, etc. as banks cut base rates. This combined with the savings from the reduced home loan EMI has the government hoping that spending trends in the country will improve. There is also speculation that, while old car loan holders may not benefit much, new car loan seekers might draw some advantage from this rate cut over the next few years.
10th March 2015