When i took Home Loan, one of the problems that i faced was to find a right EMI Calculator. The EMI Calculator available on the web are not compatible with Home Loans. There is no option to change Interest rate, EMI or add pre-payment amount during home loan tenure. With the introduction of Marginal Cost of Funds based Lending Rate, the interest rates will become more dynamic. In short, interest rates will change more frequently. As a borrower, i find it difficult to check the financial impact of any change in Home Loan.
One of the most common queries that i receive is on the impact of the change in interest rate after payment of conversion fees. For example, recently one of the readers was in a dilemma whether to pay conversion fees and reduce the interest rate from 9.75% to 9.55%. This option may not be useful always. Every decision should be backed by the financial calculations. EMI itself is a complex subject and has a major impact on your financials. A common perception is that lower EMI and higher home loan tenure is beneficial whereas in reality it is suicidal in nature. It increases the interest outflow drastically. You can check some of the do’s and don’t related to EMI in my post, 5 Golden Rules of Home Loan EMI. At the macro level, you can always ask for amortization schedule from the bank but it is an operational nightmare.
The following EMI Calculator or Amortization Calculator can be used for all types of loan. I tried and tested with Personal Loan, Auto Loan, Consumer Loan, Business Loan etc. The details required and calculation is same for any type of loan.
Please click on the following link to download EMI Calculator
In case, you don’t want complex calculator and would like to just calculate the relation between EMI and Interest rate. In this case, you can use XIRR function of excel. This is very basic level calculation and does not take into account the micro details.
How to use EMI Calculator?
For the benefit of readers, i am explaining how to use this EMI Calculator. Though it is very simple but you can do a lot of calculations. It can also help in decision making. Towards the end, i will explain whether it is beneficial to pay conversion fees and reduce the interest rate or not.
1. Download the EMI calculator from the link shared in this post.
2. You may enter the month, loan amount, interest rate and installment amount in cell no B12, C12, D12, and F12 respectively.
3. Drag cell no B12, D12 and F12 till amount in column I i.e. “Balance Loan” becomes zero or negative. For example, i entered the loan amount, interest rate and installment amount as 75L, 9.55%, and 1L respectively. In this case, “Balance Loan” becomes negative in 115th Month. Therefore, home loan tenure is 115 months.
4. Assuming there is a change in home loan interest rate from 20th month to 9% from 9.55%. Therefore, home loan tenure will reduce to 112 months.
5. Further, you increased EMI to 1.25L from 40th Month. The tenure will further reduce to 94 Months.
6. In 50th Month, you made a prepayment of 5L. Enter it in cell no G61. The home loan tenure will reduce to 89 months from 94 months.
Therefore, we observed that this EMI calculator is quite flexible. You can yourself check the impact of the change in interest rate, EMI amount, and prepayment. As i mentioned, it will work with all types of loan.
How to check whether it is beneficial to pay Conversion Fees and reduce Interest Rate?
This is one of the most common queries. When the interest rates are on a downward slope then old/existing borrowers are locked at higher interest rate. A bank may demand conversion fees to increase the spread on BPLR / RPLR or reduce markup on base rate. It decreases the interest rate for a borrower. Before you accept any such offer, it is important to know interest rate offered to new borrowers. You should not agree to anything less than interest rate offered to new borrowers. Secondly, you need to check the interest rate offered by the market leaders. I share the same in my post, Cheapest Home Loan Rates. There is a possibility that after payment of conversion fees, your bank is offering the interest rate same as offered to the new borrowers. At the same time, it might be higher than the interest rates offered by market leaders.
For example, one of the leading housing finance company provides home loan at fixed interest rate for first two years. Currently, after two years the interest rate increases to 11.5% – 12% after a shift from fixed to floating. Now they offer to reduce the interest rate to 10.20% on payment of conversion fees. In my opinion, it is not beneficial. The reason being cheapest interest rate offered is 9.55%. In such scenarios, it is beneficial to balance transfer or shift home loan to bank/HFC offering lowest interest rate.
Coming back to the main topic :). You can use EMI calculator to check whether conversion offer is beneficial or not. Continuing with the same example. Assuming you accepted the offer in 55th month to reduce the interest rate to 8.5% from 9%. You paid Rs 10,000 for same. You should first check the interest amount without offer i.e. column E from 55th month to 89th month. It is 5,22,061. After that, you change the interest rate to 8.5% from 55th to 89th Month. In this case, home loan tenure will the remain same after a change in interest rate. The new interest payout is 4,87,979. Therefore, you will save Rs 34,082 in interest but you have to pay Rs 10,000 to avail the offer. Therefore, the net benefit is Rs 24,082. In other words, conversion fees offer is beneficial for the borrower. Again i am cautioning that it may not be financially beneficial always. You should accept to reject only after calculation.
Words of Wisdom: Through this post, we have learned that how we can check and calculate so many permutations and combinations. We need not rely on the bank for all these calculations. EMI calculator is very useful decision-making tool for all types of loan. You should not forget to add any penalty or fees in cost. It should be reduced from the benefit. Last but not the least, in the case of prepayment, you should also include home loan tax deduction to check the net benefit. Normally, we only check top level calculation rather taking 360-degree approach.
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good one! very useful
You may simply drag the cells along with formula in EMI calculator excel sheet & increase no of years.
You may go for Pre-EMI
Thanks Nitin
Sure, will update and upload the revised EMI calculator.
hi,
i have aaplied for home loan at SBI.
i have mentioned tenure for 30 years as SBi gives felxibility up to 30 years.loan amount is 30 lakhs.
is it a right decision or i should go for 20 year tenure.
plz help
With tenure of 30 years your interest outflow will be more compared to 20 year Home Loan. Keep the Home Loan period as low as possible provided EMI should not exceed 50% of net take home salary / income.
Hello sir , i have a simple query “Is it really mandatory to pay a PRE-EMI for a loan of amount say eg : 30L for a property which will be ready by next 24/18 months ? , I want to go for FULL-EMI which will be followed once i got the complete possession.
You may opt for FULL EMI but pls note following points
(a) You will not get income tax benefits of Full EMI till possession of the house i.e. you can only claim income tax deduction on interest paid till possession in 5 equal installments from the FY in which you will receive possession. Even you will be paying principal component but cannot claim Income tax benefits.
(b) For under construction property, If you opt for Full EMI than lender may charge interest on Full Home Loan amount instead of amount disbursed till date i.e. you will be paying interest for amount which is not disbursed yet.
Hi Nitin, I have opted for full EMI thinking that the tenor will get shortened, how do i know that they are charging interest on full loan amount or disbursed loan amount only
You may clarify the same with the bank or can calculate on your own. For this you need break up of principal & interest component in EMI. Also you need Home Loan disbursed this date and total loan amount.
Hello Sir, I have taken a home loan of 24,40,000/- in May 2011. till now, only 1,00,000 has gone towards the principle rest (7,50,000) went towards interest. I am really frustrated i would like to close the Loan at the earliest. ( i have kept 2,20,000 in the max gain account)
can you please provide your opinion around the following options
Option 1: accumilate another 2,20,000 and prepay 4,440,000/- and reduce the EMI
Option 2: Pay the EMI till end of the tenure
Option 3: When ever is possible put some amount in to Max gain account and when it reaches maximum account outstanding, close the SBI home loan
Option 4: Keep the additional amount that i am talking about in the Option 3 in a RD and go for Option 1 or OPtion 2 when the RD amount become 4,00,000/-
I am assuming, the amount in max gain account is not a contingency fund for emergency situation. In my opinion, as and when you have surplus fund of 1 lakh, you can pay prepay Home Loan. On immediate basis you can prepay 2 lakh. Secondly you can shift your contingency funds to SBI max gain account which will help to reduce Interest liability.
Thank you very much for your advise… only problem with SBI is that, we can prepay and we can reduce the EMI only twice in the entire tenure… and atleast 20% of the outstanding has to be paid towards Prepayment.
You may check your Home Loan Agreement. I don’t think so that there is any condition on prepayment.
Hi Nitin,
I need your opinion in deciding whether to go for Trenche EMI or Full EMI for home loan. I am applying to HDFC and thinking of opting Trenche EMI as this includes both principal+interest and i have to pay EMI only for the amount dispersed. Also, I an also choose the EMI amount (for example EMI amount from Bank+5000), so in this case 5000 will directly go as a principal repayment.
But not sure if there are any hidden things in Trenche EMI. Thanks in advance.
You may go for Trenche EMI but just ensure that in Trenche EMI you are paying interest only for Home Loan disbursed till date. You will not get any tax benefit on principal component paid.
I inquired with HDFC and got the reply that i have to pay interest only on the amount disbursed. I cannot get the tax benefit, since my flat is still under construction. Thanks for you time…
You may go ahead with Trenche EMI. All the best
Hi Nitin,
I am currently in deputation in US for couple of years. I have booked an apartment in bangalore and they possession will be given in Dec 2016. HDFC bank has recommended for FLIP (flexible loan installment plan). Please suggest me
1. Should I go for FLIP?
2. Even if I am not taking the entire loan requested amount now, i will end up with paying more interest if i go for FLIP. Is my understanding correct?
2. Is there any concept like EMI only towards interest and principal against the loan availed (not on the entire loan amount) under the FLIP plan.
1. FLIP (flexible loan installment plan) is also known as Step Down Home Loan facility i.e. EMI will be high during initial period of Home Loan and will gradually decrease. This product is offered to individual who is nearing retirement or plan to retire early or for joint Home Loans. The advantage of FLIP (flexible loan installment plan) is lower interest outflow as the EMI is front loaded i.e. Higher amount is paid initially. You may go for FLIP (flexible loan installment plan)
2. It depends whether Full Loan amount will be considered for repayment or only disbursed amount. This is grey area. Best option is to ask for Amortisation Schedule from HDFC. From amortisation schedule you will come to know whther you are paying interest on full home loan value or only on disbursed amount. Normally interest is charged on disbursed amount.
3. This concept is prevalent for SBI MaxGain or other similar schemes where interest outflow for the month depend on balance being maintained in current account therefore seperate EMI is charged for principal and interest. For other Home Loan products EMI is divided into 2 parts i.e. principal and interest which is clearly mentioned in Amortisation schedule.
Hi Nitin,
I took a home loan in the year 2010 for a tenure of 300 months. Here are the details:
Loan Amount: 29.5 Lacs
Interest rate: fixed for 5 years @ 9.25% (I am close to this getting over now)
Part Prepayments: Regular
Remaining Principal currently: 8.5 Lacs
Current EMI: 25000 pm
Since I have other commitments I would want to reduce the EMI that I currently pay which is way beyond that I actually need to pay. I need the EMI to be reduced but the tenure to remain the same which is currently at 246.
Please advise if I can approach the bank to reduce the EMI and keep the tenure unchanged as I have made part prepayments regularly (Principal reduced from 29.5 L to 8.5 L). I am looking to reduce the EMI to about 12K.
You have not mentioned the bank but in most of the banks this switch is possible only at the time of pre-payment. Reason being any decrease in EMI will increase loan tenure. It is not feasible to reduce EMI and keep Home Loan tenure remain same.
Also once your Home Loan will shift from fixed interest to floating interest, your ROI will increase thus Home Loan tenure will increase. You need to check in advance, what will be your ROI after it shift to floating interest and what will be revised Home Loan tenure. There is a possibility that your EMI might also increase.
Dear Nitin,
I have taken Home loan with ICICI for Rs.18.6L on Sep 2012 with interest rate at 10.5% at floating interest rate for 240 months(20 years).
But in 2013 they have increased my Interest rate to 10.75% and also my tenure also increased by 1 more year. By 2013 i paid EMI for 12 months but still my remaining Tenure was showing as 240 months, when i enquired with ICICI they told my tenure got increased by 1 Year.
So far i paid 5L towards interest and only 60k has been paid towards Principal.
Now when i approached ICICI for Interest rate Conversion they told me to pay 0.5% as charges to reduce my interest rate to 10.5%, eventhoigh current interest rate is 10.2% they told maximum interest rate reduction will be 10.5%.
When RBI incresed the interest rate ICICI has also increased my Interest rate from 10.5% to 10.75% without my Knowledge. Now their base rate got reduced but they are not reducing my interest rate.
Kindly suggest me the better option and explaining me the concept involved in it.
Please let me know whether your Home Loan is with ICICI Bank or ICICI HFC (Housing Finance Company). It seems your Home Loan is with ICICI HFC.
Dear Sir,
I have taken loan with ICICI Bank only.
By paying conversion fees, you can reduce rate of interest to 10.15% which is currently being offered to new customers.
Kindly clarify my below queries:
1) why they have increased my tenure by one more year?
2) When interest rate got increased they have automatically, but when interest rate got reduced they are not ready to reduce?
3) Whats the meaning of Floating interest rate? Is it mean only to increase the interest rate automatically not to reduce the interest rate?
4) When i approached them to reduce the interest rate as per your suggestion by paying Conversion fees they told that they’ll reduce it to 10.5% not to 10.15%.
The interest rate is governed by terms and conditions as mentioned in Home Loan Agreement which is signed by the borrower. You may go through the same and if you observe any interest rate change violating terms and conditions of home loan agreement, you may directly take it up with the Home Loan provider.
what is penlaty if we deduct the TDs but not paid the same to conserned department .
1.5% per month SI.
Dear Nitin,
I have taken home loan in my name while i was working,now i’m not working hence i planned to added my husband as Co applicant in the home loan( He is not the Co Owner of the Property) and i planed to link his bank account to debit the EMI. Now whether my husband can claim Tax since i’m not claiming. Total interest amounting to rs.2,20,000/- PA
If he can claim then whats the procedure for this, Kindly clarify.
As your husband is not a co-owner therefore he cannot claim tax dedcution. You can include him as co-owner through gift deed but you need permission from bank as property is mortgaged.
sir, I have taken Home loan from LICHFL with 10.1% fixed for two years then varying, now, I tried to calculate the EMI from LICHFL web portal EMI calculator and compared with what they given EMI sheet, there is hell lot of diffence is existing, ie., I am paying more ~ 300- 400 per month, the same is addressed to the service branch no clear reply! shall I switch to SBI or fore closure plz advice me.
You may escalate the same and submit written complaint. You may approach consumer forum also else you can transfer to SBI.
Bhatia ji. Amazing tool. Thank you very much.
Sir,
I have taken home loan from SBI for under construction house. I received total loan amount in 5 installments as it takes three years to complete the house. I had started paying EMI just after getting 1st installment.
Is there any EMI calculator for calculating principal and interest amount for such case where loan is received in installments. It will be very usefull if I get this feature in any EMI calculator.
You may ask for amortization schedule from bank in this case. It is difficult to create calculator for such scenarios.
I suggest you to link your Home Loan to Base Rate of the bank. After this switch, pay conversion fees and reduce your Interest Rate.
thanks for your reply. but i have few queries if u kindly clear that doubt.
1. how we know our loan is linked to base rate or not.(i applied for linking in bank and manager said how u know its not linked. so i did not had any answer. i think he is also not sure. and asked me to come on saturday)
2.can we use this conversion / switch of rate of interest for more than one time?
3. in present scenario when RBI is reducing rates should we wait some more time to see if RBI reduces more rate.
1. Bank will send written communication on your registered address with revised interest rate calculations
2. Depends on bank. Some banks allow only once
3. I don’t think so..For this year, Interest rate cut cycle is over.
Sir do you have any link of the form required for conversion of SBI home loan.
In sbi site notice they mentioned about one option of conversion from fixed to flexible rate of interest.
is it the same conversion you are suggesting ? they are charging 0.56% of the balance loan amount.
does the conversion from fixed to floating rate help us anyway? current interest rate is at 12.75% as per the SBI letter which they give yearly.
There are multiple conversions which depends on case to case basis. I am referring to convert benchmark rate of home loan from BPLR / RPLR to Base Rate.
Sir my branch manager is not aware of this process i have given application in white paper for linking my home loan with base rate but nothing has been done yet. problem is i dont have the form also. i will be highly thankful if you can provide any link of form for this conversion or any format which can be used for this conversion from BPLR/RPLR to base rate. thanks
There is no specific format. You may submit application on plain paper and tale acknowledgement. If nothing is done for 2 weeks then you can raise complaint.
Hi Nitin Thanks for all the great work you are doing.
my question:
Should I reduce my EMI or try to close of loan using other funds like PF /FD? I have taken homloan of 40 lacs from LICHFL and paid almost 28 lacs so far in last 4+ years. My Emi is 43000 which will be difficult for me as I am moving back to India in July. By reducing EMI i know my tenure will increase but whatever I am saving out of EMI monthly I can pay back per 6 month towards principle to reduce. What do you suggest?
Thanks –
I suggest to close from other fund sources like FD / PF. You may consider reducing EMI but your interest outflow will increase.
Sorry i did not understand when you say “outflow will increase”?
I thought if i save out of lowered emi, lets assume I will pay 23k emi and remaining 20k I will save per month which i can pay after saving in lumpsump =20*6=120k.
Does it make sense or i am missing something? Thanks again for quick responses.
In same case, you will pay 120k after 6 months therefore you will pay high interest rate for 6 months therefore your interest outflow will be high compared to increased EMI scenario.
Thanks Nitin. Highly appreciated your help.
Hello Nitin,
I paid off almost 35 lacs but pending now ~5lacs. Since I opt for Housing loan benefit, Should i keep 5 lacs pay by EMI for next 1 yr or you suggest me to close down on all loan…I dont have any other loan so my tax saving will be zero , please guide me. Again many thanks for such a guidance and help.
You may pay and close your Home Loan.
Dear Sir,
HDFC sanctioned a 25 lacs loan against 33 lacs property for under construction flat on construction link scheme,I have taken about 16 lacs from bank as demand letter from builder . & balance amount arranged by myself. Now around 8% amount is balance to pay builder . As per my request bank strated EMI on disbursement amount. Now I requested to bank repayment of some amount but they refusing for repayment & asking for letter on no payment balance from builder. My question is – bank stand is correct or not?
Both yes and no. It seems banks concern is that you should not default on balance payment to builder. I suggest to prepay after clearing builders due.
Hello Nitin Sir
I have applied for home loan with HDFC and L&T Finance.
1. How to compare compare the two and on what parameters shall I consider to compare apart from rate of interest?
2. I am 40 , shall I go for resale or ready possession or under construction flat from interest component and income tax benefits perspective ?
Happy Vijayadashami.
Thanks and regards
-Shailesh
1. Please check my posts on Home Loan
2. I will prefer resale.
Hi Nitin,
This calculator looks interesting & quite helpful, Please help understand what all inputs needs to be filled, it seems compatible for 15 yrs whereas most of the home loan borrowers opt for tenure of 20 yrs.
Please let us know your thoughts on PRE EMI vs FULL EMI vs Tranche based EMI for under construction property,(Lender: ICICI Bank) In my case I would get possession approximately in 15 months, till then I wont get tax benefit and I will have to pay for my existing rented flat along with EMIs, which option is better in long term & short term.
Regards,
Shadab
helo, i have taken 5lakh loan from SBI for 14years i was told interest rate is 10.75% floating i think not sure, 2lakh-sep08, 1lkh-oct’08, 1lkh-nov08.55K-jan’09 and some small amounts making the loan balance of Rs.483551/- as on 30/12/2009 and they started deduction of 5200 as EMI. in august 2010 they change emi to 5375. from 01-03-2012 they started deduction of OS Int Repay different in different months. in april 2015 deduction was Rs.1959/- as OS int Repay and Rs.5375/-as EMI.
now what is your advice on this.
1. do i chose for one time reduction in rate of interest or
2. do i chose to link my account to base rate or
3.should i change bank.
waiting for your reply.
Hi Nitin, thanks for informative posts. I have a home loan sanction letter of 40 lakhs for 15 years from HDFC however now my requirement is only 25 lakh for 10 years. My loan agent is saying he can’t change tenure during reimbursement application process but i need to contact HDFC after disbursement for change in tenure. Is this correct? My worry is change in tenure after disbursement may involve a fee/fine. Please suggest.
I am assuming you have not availed Home Loan under any special scheme. Follow following 2 steps to fix the problem.
1. Submit written application with HDFC that you only need home loan of 25 lac against sanction amount of 40 lac. Therefore, your loan will be 25 lacs for 15 years.
2. Once your EMI starts, you can submit another application to increase your EMI so that you home loan tenure decrease from 15 years to 10 years.
You need to do some calculations at your end in point no 2 to adjust EMI so that home loan tenure is fixed to 10 years.
Dear Sir,
I have got a loan from PNBHFL. The initial sanctioned amount was Rs. 54 Lakh.
First installment was released by them for Rs. 2333752/- in april. Now for the final disbursement i want to avail only 22,66,248/- and the total loan amount thus availed will be Rs. 46 Lakh.
Since i am availing loan amount less than what was sanctioned, I want to know what would be more beneficial, reducing EMI or tenure? Please help asap.
In my opinion, you can reduce tenure as it is financially more beneficial for you.
Nitin:
I am planning to take a home loan, of 60lakhs INR, with interest rate of 9.55% for 30 years. Emi would be around (52,000 INR)and pay around 25-30 lakhs INR as pre-payment, Is there any way where I can calculate my New EMI.
Please use/download calculator as shared by me in the post on this page.
Thank you, very much sir… It was really very easy.. Great Job..Bhatia Sirjee
What do you recommend. Waiting for MCLR based home loan product from SBI or taking a SBI MaxGain home loan right now before April 1 ?
As i shared in my following post that new borrowers should avail Home Loan on or before Mar 31, 2016.
https://www.nitinbhatia.in/home-loan/marginal-cost-of-funds-based-lending-rate/
Hi Nitin Sir,
Need your advice, my sister looking for a loan from HDFC at thr folating rate of 9.4%. she can afford emi of around 20000. so what should be the loan period 15 yrs , 20 or 25 yrs????
Please check my following post
https://www.nitinbhatia.in/home-loan/home-loan-tenure/
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Thanks a lot Sir.