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hanth23 · Joined: 22 Jul 2007 Posts: 23 11.08 Dollars($)

How is EMI calculated

adonis · Posted: Mon Jul 23, 2007 12:22 am Post subject: RE: EMI calculations

Hanth,

EMI stands for equated monthly installment. When you are taking out a home loan, you need to repay the loan to the housing finance agency in almost equal monthly installments known as the EMI. The EMI constitutes a payment towards the principal and also the interest.

The value of your EMI will depend upon the amount you borrow, the rate of interest charged on it and the time period during which one needs to repay the loan.

However, during the initial few years of the loan, the finance company tries to extract more interest payments and less payment towards the principal.

helping_user

Hi hanth,

The Emi is calculated based on the following formulae.

EMI = [(p*r) (1+r)^n]/[(1+r)^n – 1

Here, p = principal loan amount
r = rate of interest per installment period
n = no. of installments during the loan term
^ = whole to the power

You can also use our Fixed rate calculator to determine the EMI. I think that will be much easier process.

Thanks.

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