EMI Calculator

EMI = [P x R x (1+R)^N] / [(1+R)^N - 1], where P is principal loan amount, R is monthly interest rate, and N is loan tenure in months. The formula gives a fixed monthly payment that covers both principal and interest.

Prepayment can either reduce your monthly EMI while keeping the tenure same, or reduce the tenure while keeping EMI same. Reducing tenure saves more interest in the long run. Most banks allow you to choose.

Under the old tax regime, principal repayment up to Rs 1.5 lakh qualifies under Section 80C, and interest up to Rs 2 lakh is deductible under Section 24(b) for self-occupied property. For let-out property, there is no limit on interest deduction.

Financial advisors recommend keeping total EMI payments (all loans combined) below 40-50% of your net monthly income. Most banks also use this ratio to determine your loan eligibility. Lower ratios improve approval chances and leave room for emergencies.

In a falling interest rate environment, floating rates are better as your EMI reduces. In a rising rate environment, fixed rates protect you. Most home loans in India are floating rate, benchmarked to the repo rate. Fixed rate options are typically 1-2% higher.