1. What is Home Loan 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 includes both principal and interest components.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Principal loan amount (after prepayment deduction)
• \( r \) — Monthly interest rate (annual rate divided by 12)
• \( n \) — Number of monthly payments (loan term in years × 12)

Explanation: The formula calculates the fixed monthly payment that would pay off the loan with interest over the specified term.

3. Importance of Prepayment

Details: Making prepayments reduces the principal amount, which in turn reduces both the total interest paid and the loan tenure. Even small prepayments can lead to significant savings over time.

4. Using the Calculator

Tips: Enter the principal amount, annual interest rate, loan term in years, and any prepayment amount you plan to make. The calculator will show your EMI, total interest, and total payment.

5. Frequently Asked Questions (FAQ)

Q1: How does prepayment affect my loan?
A: Prepayment reduces your principal amount, which decreases both your total interest and may shorten your loan term.

Q2: Should I prepay my home loan?
A: If you have extra funds and your loan interest rate is higher than your investment returns, prepayment can be beneficial.

Q3: Are there prepayment penalties?
A: Some lenders charge prepayment penalties. Check your loan agreement before making prepayments.

Q4: How often can I make prepayments?
A: This depends on your loan terms. Some lenders allow unlimited prepayments, while others may have restrictions.

Q5: Is it better to reduce EMI or loan tenure?
A: Reducing loan tenure saves more interest in the long run, while reducing EMI improves monthly cash flow.