When we are applying for a home loan, our first and foremost desire is to get the lowest interest rates. After all, the monthly installment or EMI is directly dependent on the rate of interest and for the easy repayment, a borrower would obviously want low-interest rates. In today’s time, getting an affordable housing or home loan is not a difficult task. The interest rate on a home or housing loan at Bank of Baroda is 8.35% p.a. which is one of the lowest home loan interest rates in India.
Home Loan Interest Rates in Top 10 Banks:
- State Bank of India- 8.70% p.a. onwards
- ICICI Bank- 8.65% p.a. onwards
- Axis Bank- 8.65% p.a. onwards
- HDFC Bank- 8.65% p.a. onwards
- Bank of Baroda- 8.35% p.a.
- Bank of India- 8.65 p.a. onwards
- LIC HFL- 8.50% p.a. onwards
- Canara Bank- 8.65% p.a. onwards
- Andhra Bank- 8.90% p.a. onwards
- Bank of Maharashtra- 8.95% p.a. onwards
Housing Loan Interest Calculator or EMI Calculator:
An EMI calculator is also known as the interest calculator since it is used for the calculation of the equated monthly installment (EMI) of the loan. Having said that, it is important to note that the calculation of the monthly installments is done on the basis of the annual interest rate. For instance, if you have been offered a home loan at 8.35% p.a. You can easily calculate the monthly interest by just dividing the annual rate by 12. So, here the monthly interest rate will be 8.35%/12=0.69% per month.
The home loan EMI calculator takes into account the following details and then tells you the monthly installments, the total interest outgo, and the total amount (principal+interest). Now, in general, people prefer to use the EMI calculator in advance so as to check their loan affordability and hence plan their monthly expenses accordingly. Let us take an example of a person who takes a home loan with the following details:
Loan amount- ₹20 lakhs
Tenure- 20 years
Interest rate- 8.35% p.a.
The details of the payment will be as follows:
EMI- ₹17,167
Total interest outgo- ₹21,20,094
Total amount- ₹41,20,094
Impact of Loan tenure on EMI:
We all know that the general tenure offered under a home loan is 15-20 years. In addition to this, since the home loans are generally taken for a higher loan amount, people usually are not aware of the fact that the longer the tenure will be the more interest you will have to pay. Yes, many of us think that when we choose a longer tenure for a particular loan, the EMIs are lower and hence it looks affordable. But, the reality is something very different. How? Well, when the tenure is longer, the EMIs are lower but the total interest outgo is higher. So, the overall loan affordability gets confused and that is the reason most of the people opt for the foreclosure process.
Let us take an example of two people are taking a loan with the same details except for the tenure, here is the difference in their total interest outgo.
Person A
Loan amount- ₹20 lakhs
Tenure- 20 years
Interest rate- 8.35% p.a.
EMI- ₹17,167
Total interest outgo- ₹21,20,094
Total amount- ₹41,20,094
Person B
Loan amount- ₹20 lakhs
Tenure- 10 years
Interest rate- 8.35% p.a.
EMI- ₹24,637
Total interest outgo- ₹9,56,437
Total amount- ₹29,56,437
As you can see, the there is a clear picture of the difference between the payments of the person A and person B. Hence, for an affordable loan, it is suggested to choose the shorter tenure. For this purpose, the EMI calculator is the tool.
Benefits of using an EMI calculator:
- Time-saving
- Accurate
- Quick results
- Flexible comparisons
- Tells more than EMI
- Check loan affordability
Thus, it is quite visible how the interest rate, EMI, and loan affordability are connected. So, go for proper research and calculation in advance before you make the final decision.
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