Most property purchases in India are funded partly by a home loan. Before you shortlist homes or plots, it helps to know what monthly payment you can comfortably manage. That payment is your EMI, or equated monthly instalment.
What decides your EMI
- Loan amount: the property price minus your down payment.
- Interest rate: fixed or floating, set by your lender.
- Tenure: the number of years you take to repay.
A longer tenure lowers the EMI but increases the total interest you pay. A larger down payment reduces both.
How the calculation works
EMI = P x r x (1 + r)^n / ((1 + r)^n – 1), where P is the loan amount, r is the monthly interest rate (annual rate divided by 12 and by 100) and n is the number of monthly payments. You do not need to do this by hand: use the EMI calculator on our homepage to try different prices, down payments and tenures.
How much can you afford?
Many lenders and planners suggest keeping all your EMIs within roughly 40 to 50 percent of your monthly take-home income. Leave room for savings, emergencies and rising costs.
Costs beyond the EMI
- Down payment, typically 10 to 25 percent of the property value
- Stamp duty and registration charges
- Loan processing fees and legal charges
- Interiors, furniture and moving costs
- Maintenance or association charges for apartments and gated communities
Plot loans vs home loans
Loans for buying a plot often have lower loan-to-value limits and may require the layout to be approved. If you plan to build, a composite loan for the plot and construction can be simpler.
Tips to reduce your EMI burden
- Improve your credit score before applying.
- Compare offers from several banks and housing finance companies.
- Make part-prepayments when you can, if your loan allows it without penalty.
Our advisors can connect you with partner lenders and help you set a realistic budget. Talk to us.
