How EMI is calculated
Your EMI (Equated Monthly Instalment) depends on three inputs: the loan amount, the interest rate, and the tenure. The formula spreads the principal and interest across equal monthly payments, with a larger share going toward interest in the early years and more toward principal as the tenure progresses.
Worked example
A ₹30 lakh home loan at 8.5% p.a. over 20 years works out to an EMI of roughly ₹26,000/month, with total interest paid over the full tenure close to the principal amount itself. Reducing the tenure to 15 years raises the EMI but meaningfully reduces total interest paid — try both tenures in the calculator above to compare.
Factors that affect your EMI
- Loan amount — a larger principal directly increases your EMI
- Interest rate — even a 0.5% difference can change your EMI meaningfully over a long tenure
- Tenure — a longer tenure lowers your monthly EMI but increases total interest paid
Does a longer tenure always cost more overall?
Generally yes — a longer tenure reduces your monthly EMI but increases the total interest paid over the life of the loan, since interest accrues for a longer period.
Is the EMI shown here exactly what I'll pay?
This is an indicative calculation based on the inputs you provide. Your actual EMI depends on the final interest rate and terms offered by the lender after assessment.
Can I reduce my EMI later?
Yes — making a lump-sum prepayment can reduce either your tenure or your EMI. Try our Prepayment Calculator to see the impact.