A home loan’s monthly EMI depends on multiple factors, like the loan amount, interest rate, and loan tenure. While planning to borrow a home loan EMI of Rs. 50 lakhs.
Purchasing a home is a critical decision as it involves a long-term financial commitment. If an individual wants to buy a house and borrow a home loan of Rs. 50 lakhs, they must be wondering how much their 50 lakh home loan EMI will be. Here is everything one needs to know about their EMIs.
Factors Affecting Home Loan EMIs
Several factors influence home loan EMIs. Some of the major ones include:
MCLR Rates: MCLR (Marginal Cost of Funds based Lending Rate) is the minimum interest rate a lending institution may offer to the borrowers. Lending institutions review their MCLR annually and revise them as needed. They are guided by RBI policy decisions and economic benchmarks in this regard.
Interest Rate Type: Home loan lending institutions offer loans with floating interest rates. The floating interest rates increase or decrease with fluctuating MCLR. Depending on the variations in the interest rate, the 50 lakh home loan EMI may decrease or increase over the loan term.
A credit rating: A credit score indicates an applicant’s repayment history, creditworthiness, and financial discipline. Lending institutions rely on this number to offer interest rates on home loans. A low credit rating translates into higher credit risk, causing lending institutions to charge a higher interest rate or reject the loan application. On the other hand, a higher credit rating makes a lending institution willing to offer a home loan at a lower interest rate.
Property Location: The property location plays a determining role in the interest rates being charged. Those located in a place with good connectivity and amenities have a higher resale value. So, lending institutions perceive them as lucrative properties and charge lower interest rates for them. Lower interest rates mean a smaller EMI amount for the borrower.
Loan Tenure: Home loan lending institutions offer flexible repayment terms to borrowers. Selecting a longer term means smaller EMIs and a shorter term means bigger EMIs. One may use a home loan EMI calculator online to calculate their EMI amount and select a loan term with EMIs suitable to their budget.
LTV Ratio: LTV ratio is the percentage of the property’s value that one can finance through a loan. A larger loan amount attracts a higher interest rate due to the higher risk involved for the lending institution. Rs. 50 lakh is a reasonable loan amount to borrow. However, one may reduce the interest rate and decrease the EMI amount by borrowing less.
Job Profile: Applicants with a stable income source are low-risk borrowers for lending institutions. So, they offer lower interest rates to them, thus reducing their EMI amount.
Down Payment: Most lending institutions fund up to a maximum of 90% of the property’s price as a home loan. The more one borrows, the bigger their EMIs. So, the borrower must try making a bigger down payment and borrowing less to reduce the EMI amount.
How to Calculate a Home Loan EMI Amount
An individual may use two methods to calculate their EMI amount:
- Using an Online EMI Calculator
Calculating EMIs using a home loan EMI calculator online is a faster, easier, and error-free method of calculating home loan EMIs. The user needs to enter a few details in the spaces provided and get their EMI amount displayed on their screen almost instantly.
These are a few things one must know about a 50-lakh home loan EMI. Although several factors determine the EMI amount, one may minimize it by improving their credit score, saving for a bigger down payment, selecting an appropriate loan tenure, and choosing the right interest rate. Use an online EMI calculator to calculate the EMI based on the loan amount, interest rate, and loan term, and plan finances accordingly.
- Manual Method
To manually calculate the 50 lakh home loan EMI, one may apply this mathematical formula:
EMI = P × r × (1 + r) n/ ((1 + r) n – 1)
Here, P is the principal loan amount, r is the interest rate, and n is the number of months in the loan tenure. For instance, if an applicant takes an Rs. 50 lakh home loan at 11% interest rate for 180 months, their monthly EMI amount would be Rs. 56,830. However, if they take the same amount for 300 months, their EMI amount will be Rs. 49,006.
A home loan is the most important form of financial help which helps you to build a house. The cost of the home loan is much higher than that of any other product and so, it plays a major role in determining how big your home is.
Rs 50 lakh home loan is a perfect solution for all your home loan needs. Here, we will help you understand the various benefits associated with home loans.