Calculate Home Loan EMI for Rs. 1 Crore
Being a secured credit facility, individuals can easily obtain a sizeable capital of Rs. 1 crore to meet their long-ticket expenses for house construction. Nevertheless, while requesting for the amount, they must ensure that the interest rate is comparatively low. This way, they can ensure that EMI of a home loan of Rs. 1 crore gets reduced to a large extent, making the debt repayment more convenient. It will also reduce their interest outgo significantly.
Home Loan Interest Rate for 2022
The interest rate of a home loan differs from one lending institution to another. It may range from 7% to 12%. The actual borrowing rate may differ among different financial institutions. Borrowers must therefore know the ways to get a reduced rate and decrease EMI of a home loan of Rs. 1 crore.
.jpg)
Strategies to Reduce the Applicable Interest Rate on Home Loan
Here are the simple ways to secure an attractive interest rate on a home loan:
● Going for a substantial down payment
A home loan comes with an LTV ratio of around 80%. This means that if the total construction cost of a house is Rs. 2 crores, borrowers will get a home loan amount of Rs. 1.6 crore. They need to bear the remaining amount from their savings. It helps lenders to manage their risk factors. Lenders' risk is reduced further when customers contribute more than the LTV ratio towards their house construction. So, they can agree to reduce the applicable interest rate if the customer negotiates.
● Reducing the length of tenure
In a lower tenure, lending institutions get back their lent capital and overall earnings (interest outgo) quickly. As a result, lending institutions may agree to charge lower interest rates.
While opting for a shorter tenure, individuals need to ensure that the EMI amount they get is within their repayment capacity. Otherwise, they may experience financial distress while repaying their debts.
● Opting for a floating rate home loan
Individuals can get their home loans either on a fixed or a floating interest rate. The applicable borrowing charge in a floating rate home loan is generally 1-2% lower than the counterpart. This can reduce payable EMI amounts by a large extent.
Let’s assume that an individual borrows Rs. 1 crore for a fixed interest rate of 8%, and the chosen tenure is 20 years. In this regard, the Rs. 1 crore home loan emi will be Rs. 83,644. If he/she goes with the floating rate home loan and gets a 1% lower rate, the EMI amount will reduce to Rs. 77,530, saving Rs. 6,713 every month.
In this regard, borrowers also need to know that this floating rate follows the current market conditions and fluctuates accordingly. They may have to bear the risk of market instability for choosing this rate for their home loan.
● Meeting the eligibility criteria
Every lending institution has a definite set of eligibility standards, including age, income, profession, working experience, etc. These help them check whether the applicants can repay loan amounts on time. By meeting these eligibility standards properly, individuals can request their lending institutions to fix an attractive interest rate.
● Opting for a home loan balance transfer
A home loan balance transfer facility allows individuals to switch their lending institutions in the middle of repayment. They need to transfer their outstanding loan balance to an institution charging a lower interest rate. It will reduce their interest outgo on the remaining principal amount.
Besides the ways to get a lower interest rate, individuals also need to know how they can calculate the applicable EMIs. This way, they can stay aware of their debt obligations and make proper financial planning for repayment.
How to Calculate EMI of a Home Loan of Rs. 1 Crore
Individuals can easily calculate their home loan EMI amount in the following ways:
Step 1: Open a home loan EMI calculator available on the websites of a lending institution
Step 2: Enter the loan amount, interest rate and tenure
Upon completing these simple steps, they can get the EMI amount from the calculator's result page.
In conclusion, a home loan is one of the best financing options to raise funds for constructing their houses. Individuals can easily borrow Rs. 1 crore or more at an affordable interest rate. Nevertheless, knowing the amount of EMI of a home loan of Rs. 1 crore is important while borrowing. It can help borrowers make better financial planning so that they do not experience any struggle while repaying their debts.
