How to Calculate Interest Rates While Availing a Home Loan | Kotak Mahindra Bank - Home Loan Stories
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17 FEBRUARY, 2022

A home loan can help you fund the purchase of your house property without draining your hard-earned savings. However, you must know that the interest rates of the home loans are a crucial cost that you must consider while availing a home loan. The interest rates are decided by the lenders based on your eligibility and profile.

The home loan interest rates sometimes include more than half of the entire repayment amount. While you know the total principal amount you need to pay at the end of the tenure, knowing the total interest component can help you plan your loan better. 

However, you can still get an idea of your interest obligation by using tools like the EMI calculator.


What is a Home Loan EMI calculator?

Home loan EMI calculator is an online mathematical tool that you can use to find your home loan interest. This calculator can help you calculate your interest charges payable for the home loan based on the values you enter.   


It works on the following mathematical formula:


P x R x (1+R)^N / [(1+R)^N-1]



P - Principal loan amount

N = Loan tenure in months

R = interest rate in months.


You can use this formula to manually calculate the total interest payable or you can use the EMI calculator for the same.


How to use an EMI calculator?

Visit the lender's website and click on the home loan EMI calculator

  • Use the sliders or enter the figures manually
  • Input the Principal, i.e. the loan amount
  • Enter the interest rate charged by the lender
  • Enter the tenure you have chosen
  • The results will be displayed instantly. You can see the total interest payable for the loan.


Benefits of home EMI calculator


  • It is free

EMI calculator is available on various aggregator websites. It is also available on almost all lenders’ websites. It is free of charge and can be used any number of times. You can use it anywhere and anytime. It is helpful as you can change the variables to see different results for your loan.


  • It is accurate

Manual calculations leave room for errors and mistakes. With an EMI calculator, you can be assured that you will get an accurate interest amount without any mistakes. 


  • It helps you to borrow wisely.

Knowing your interest component aids you in borrowing wisely and taking the right decision. With this calculator, you can find out the total interest component of your repayment amount and accordingly set the tenure. If you want to reduce your interest outgo, you can reduce the tenure and vice versa.


With an EMI calculator, you can find your EMI, and total home loan interest rate and then make an informed decision. It can help you decide your budget for the home purchase and plan your loan efficiently. So, what are you waiting for? Use an EMI calculator, find your interest payable and apply for home loan today.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.