How is EMI on home loan calculated and is it compounded annually?
To calculate the emi of home loan can use the following formula to find the desired result. EMI=[P∗R∗(1+R)^N]/[(1+R)^N−1], where P stands for the principal/loan amount , R is the interest rate per month(if ROI is 10% then use 10/1200 and N is the number of monthly instalments.
In excel you can use the formula
The calculation on home loans’ interest takes place on a daily basis and compounded on a monthly basis.
One can opt to use the online emi calculators to find out the emi amount in a matter of seconds. The calculators use advanced calculation softwares to provide the most accurate details and that too very fastly. It will use all the essential information like the principal, interest, and the tenure of the home loan. One just needs to fill in the relevant and accurate information and apply the calculator to get the results. You will also get the EMI you need to pay to the lender each month, in order to repay the home loan in the stipulated time. There are numerous such calculators available online which you can try. One of the convenient ones that you can try is that of Shriram city’s calculator. It works in a very lucid manner so everyone can use it very comfortably. It provides the most accurate results along with comparison of the loans offered by different institutions.