How to Calculate ICICI Home Loan EMIs by Your Own?

ICICI home loans are a means of fulfilling your dream of having a home of your own. Since it is not easy to purchase a home outright, buying the house with a down payment for a fraction of the amount and then paying off the rest in monthly installments is an easy and convenient way to achieve the dream. The monthly installments can be easily calculated using the ICICI home loan EMI calculator.

What is an EMI Calculator?

An EMI calculator is a convenient online tool, which makes it easy to evaluate how much you would need to pay every month for the tenure of a particular home loan amount and a specific rate of interest. Once these three values are available, the EMI is calculated instantly.

What is an EMI?

EMIs or Equated Monthly Installments are payments, which need to be made every month to clear the loan principal and interest payments combined. Every EMI has an interest component and a principal component. The initial EMIs have a greater component of interest, which keeps reducing as the payments are made. In contrast, the principal amount is smaller initially and increases with each payment. This happens because the EMI amount is fixed.

When deciding on the EMI, you should take care to ensure that the amount is such that you can pay it comfortably every month without it impacting your regular household expenses.

How is EMI Calculated?

Most lenders use a standard formula for the calculation of the EMI. So, if the loan amount, interest rate and the number of installments are fixed, all lenders would charge you the same EMI with one variable changing the EMI changes. You can use an ICICI loan calculator, Excel or manual calculations to calculate the EMI. The interest component of the EMI is calculated for the balance principal amount at the beginning of the month.

How Are the Payments Made?

The payments are made as per the Amortization schedule. This schedule gives the details of the breakup of each installment by principal and interest. It also tells the outstanding balance at the beginning of the month for which the interest has been charged and the balance after the payment has been made. The payments can be made via post-dated cheques or through standing instructions to your bank. In the second method, the payments get debited every month on a specific date as instructed by you.

What Are the Factors Affecting the EMI?

The EMIs can change with the alteration of any of the following three variables:

  1. Loan Amount:The amount you can get as a loan for your home varies with the value of the property and your capability of repayment. You can estimate your loan eligibility by using the home loan eligibility calculator ICICI has designed specifically for the purpose. EMIs increase with the loan amount.
  2. The rate of Interest: This varies from lender to lender and at ICICI it can vary depending on your credit score and your relationship with the bank. If you are an existing customer of the bank, you are very likely to get a better deal from them. You can calculate emi for home loan you can afford at the specified rate if you are comfortable with a certain EMI value with the help of ICICI bank home loan calculator. The higher rate of interest implies higher EMIs
  3. Tenure: As you increase the tenure of the loan to its maximum, the EMIs become smaller. But, this does not mean that you are paying a lesser amount to the bank. In fact, you pay much more than your loan amount if you stretch the tenure. The housing loan EMI calculator can show you the difference in the total amount repaid over the various tenures so that you can make a sound judgment.

Why Is It Better to Use an EMI Calculator?

There are several benefits of using it, the main ones being speed and accuracy. It calculate emi for home loan for a given set of variables instantly. If you to do the same manually, you would be spending a lot of time and there is a chance of making a mistake. Also, if you want to calculate the EMI with different combinations to choose the best one, you would need to make multiple calculations.

The calculator is also very simple to use. You just need to enter the loan amount, the rate and the tenure. That is the only effort from your side. Its simplicity makes it comfortable to use even for people who are not very computer savvy. Also, it is free to use as many times as you want to use it.

The EMI calculator gives you the amortization table as well, which shows you the rate at which your principal loan amount is being paid along with interest. If you wish to make a part payment at any time, you can use your outstanding balance to calculate a fresh set of figures of EMI and tenure.

We hope that this introduction to EMI and its calculation will prove helpful for you when you decide to go for a home loan from ICICI bank. As and when you get closer to having enough savings for the down payment for your home and enough monthly savings for a decent EMI, you can start dreaming of having a home of your own very soon.

Additional Read: Check EMI How Much You Can Afford?

Author Since: Jan 17, 2019

Anoop Bansal, a professional Chartered Accountant based in the National Capital - Delhi. I have worked for the top-notch Indian and International banking firms for the past 10 years. Currently, I work at blog and a financial consultant for different SMEs in India. Follow me on Facebook, Twitter and Linkedin for more information.

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