Estimating the monthly instalments is extremely important to avoid a default or delay in paying the EMIs. If you miss out on any, your CIBIL score can get severely affected. Hence, if you are taking a loan of Rs. 20 lakh, it is a must to calculate the EMI on Rs. 20 lakh home loan to plan your finances strategically and avoid any delay in repayments. You can calculate the EMI both manually and using an online home loan EMI calculator.
EMI Calculation Using Formula
You can manually calculate EMI amounts using the formula
EMI = P × r × (1 + r)n/((1 + r)n – 1)
Where P = Loan amount, n = tenure in number of months, r = interest rate.
However, the calculation can be lengthy, and results are prone to errors since the numbers are significant. Hence you can you an online calculator to serve the purpose.
EMI Calculation Using Online Calculator
The steps to use an online home loan calculator are as follows:
Step 1: Visit the official website of a financial institution
Step 2: Navigate to the home loan section
Step 3: Select the online home loan EMI calculator
Step 4: Adjust the loan principal amount to Rs. 20 Lakh
Step 5: Adjust the pointer to set the interest rate offered by your lender and your preferred loan tenure
The EMI amount for the given data will appear instantly as soon as you put all the values. Additionally, the calculator also displays the total interest outgo and the total cost of loan for the entered values.
Benefits of Online EMI Calculator
The benefits of an online EMI calculator are as follows:
- Easy to Use: People from any age group can use an online home loan calculator to determine the EMI amount. This is beneficial as people do not have to spend additional time learning how to use the calculator before utilising it to calculate EMI on home loans.
- Accurate: Accuracy is essential while determining the EMIs because it helps you make proper financial planning. Hence, any discrepancies in the calculation of EMI can lead to a severe financial problem. Human calculation is prone to errors. Hence, you can use an online calculator to get accurate results.
- Quick to use: By opting for an online EMI calculator, you can get an accurate estimation of the EMI in no time. This benefits you in taking urgent decisions on your loan amount and prevents any default or delay during repayment.
- Compare EMI: Before deciding on a home loan, it is necessary to compare EMIs for different interest rates offered by various financial institutions. While calculating Rs. 20 lakh home loan EMI, you can keep the loan amount constant and change the other parameters of repayment tenure and interest rate. This would aid you in making a final choice of a financial institution to get maximum savings on your home loan.
- Free of cost: These online home loan calculators are free of charge. Hence, you can use them as many times as you want.
After determining the tenure and interest rate, you must check if you fulfil all the eligibility criteria for the loan.
Eligibility Criteria for a Home Loan
The eligibility criteria for a home loan are as follows:
- Applicants must be Indian citizens
- Must be salaried or a self-employed individual
- For self-employed individuals:
- Age between 25 years to 70 years
- At least 5 years of business vintage
- Must have an annual income of Rs.2 lakh per year.
- For salaried individuals:
- Age between 23 years to 62 years
- At least three years of work experience
- Must have a monthly income of Rs.10,000 per month.
Steps to Apply For a Home Loan
Below are the steps that you must follow to apply for a home loan:
Step 1: Move to the official website of a financial institution
Step 2: Go to the ‘Home Loan’ tab
Step 3: Click on apply online.
Step 4: Fill in the required details
Step 5: Upload the necessary documents
Step 6: Review and submit the application form.
You can also keep the documents scanned beforehand to avoid last-minute delay.
Documents Required to Apply for a Home Loan
Below are the documents that you might require to apply for a home loan online:
- PAN card, voter card, Aadhaar card, driving license for identity proof
- Utility bills for address proof
- Bank statement or pay slips for the last three months
- For salaried individuals: A Copy of Form 16 or Income Tax Return (ITR) of the previous two years
- For self-employed individuals: Last three years’ ITR, profit statement of last three years, qualification certificate, TDS Certificate and Business Licence Details with Address Proof
- Property Papers
- Form-16
Now that you know how to estimate Rs. 20 lakh home loan EMI, you can calculate it using different interest rates and tenure to optimise the monthly instalments. Also, review the application form and upload documents correctly to avoid a loan rejection.
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