You must have taken a housing loan from a bank or NBFC to purchase your dream home. As the property value goes on increasing, buying a home is a great idea, both from the perspective of the investor and owner. I want you to know that your housing loan interest rate directly affects how affordable the loan is and how easily you can repay it.
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Since your repayment is in the form of EMIs that includes both principal and interest, a lower housing loan interest decreases your EMIs.
Let me explain how to calculate housing loan interest and principal:
EMI = [PxRx(1+R)^N]/[(1+R)^N-1], where N, R, and P are the variables.The EMI value changes every time you change any of the 3 variables.
Now, let me explain these variables in detail.
N = No. of years for which the loan is given to you. Since people pay EMIs every month, the duration is calculated in the no. of months.
R = The rate of interest set by the bank.
P = The ‘Principal Amount’, which is the original loan amount offered to you by the bank, on which the interest will be calculated.
Now, let me explain how to calculate housing loan interest rate using an example:
Let’s say you take a home loan of Rs.50,00,000 with an average interest rate of 12 percent for 10 years.
P = Rs.50,00,000, N = 10 years (120 months), and R = 12/100/12 = 0.01,
So, EMI = [5000000 x 0.01 x (1+0.01)^120]/[(1+0.01)^120-1]
EMI = Rs.71735.
I hope now you know how to calculate housing loan interest.
Get a Housing Loan to Buy Your Dream Home through NoBroker Read more: How to reduce EMI of existing home loan? How to reduce EMI of existing home loan? What is the EMI for Rs. 10,00,000 home loan? What happens if housing loan EMI is not paid? How to repay home loan faster?Your Feedback Matters! How was this Answer?
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How to calculate housing loan interest rate?
Ramakant
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2021-10-22T15:09:36+00:00 2021-10-25T10:38:57+00:00Comment
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