A Home Loan EMI calculator is the simplest and quickest way to know the precise EMI amount. However, the mathematical formula to calculate the EMI on a home loan is:
EMI= [P x R x (1+R)^N]/[(1+R)^N-1]
where the principal loan amount is represented by ‘P’, ‘R’ is the rate of interest on the loan, and ‘N’ is the tenure for which the loan has been availed (in a number of months).
Example: For a principal loan amount of Rs. 50,00,000 carrying an interest rate of 12% per annum (12/100/12 or 0.01 – convert to months) for a tenure of 10 years, i.e., 120 months, the EMI can be calculated as follows:
EMI = [50,00,000 x 0.010 x (1+0.01)^120]/[(1+0.010)^120-1]
= Rs. 71,735 per month.