1. What is EMI?

EMI (Equated Monthly Installment) is the fixed payment amount made by a borrower to a lender at a specified date each calendar month. It's used to pay off both interest and principal each month so that over the loan term, the loan is paid off in full.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Principal loan amount (PHP)
• \( r \) — Monthly interest rate (annual rate divided by 12 months)
• \( n \) — Loan term in months
• \( PMT \) — Monthly EMI payment (PHP)

Explanation: The formula calculates the fixed monthly payment that would be required to repay the loan over its term, including both principal and interest.

3. Importance of EMI Calculation

Details: Calculating EMI helps borrowers understand their monthly financial commitment, plan their budget, and compare different loan offers from banks like BDO, BPI, or Metrobank.

4. Using the Calculator

Tips: Enter the principal amount in PHP, annual interest rate (e.g., 6.00 for 6%), and loan term in years. The calculator will show your monthly EMI, total payment, and total interest.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical home loan interest rate in the Philippines?
A: As of 2023, rates typically range from 5% to 8% depending on the bank and loan terms.

Q2: How does loan term affect EMI?
A: Longer terms reduce monthly EMI but increase total interest paid. Shorter terms have higher EMIs but lower total interest.

Q3: What other costs should I consider for a home loan?
A: Consider processing fees, insurance, appraisal fees, and other bank charges which vary by lender.

Q4: Can I prepay my home loan?
A: Most banks allow prepayment but may charge prepayment penalties, especially in early years.

Q5: How can I reduce my EMI burden?
A: Making a larger down payment, negotiating a lower interest rate, or choosing a longer term can reduce EMI.