How the EMI calculator works

An Equated Monthly Instalment (EMI) is the fixed payment you make to a lender every month until a loan is fully repaid. Each EMI covers both interest and a part of the principal.

The formula is EMI = [P × r × (1 + r)^n] / [(1 + r)^n − 1], where P is the loan amount (principal), r is the monthly interest rate (annual rate ÷ 12 ÷ 100) and n is the number of monthly instalments (tenure in years × 12).

Enter the loan amount, the annual interest rate and the tenure. The tool instantly shows your monthly EMI, the total interest payable over the loan and the total amount you will repay.

How EMI, interest and tenure interact

• A higher interest rate raises both your EMI and total interest cost.
• A longer tenure lowers your EMI but increases the total interest you pay overall.
• A shorter tenure means a higher EMI but a much smaller total interest outgo.
• Prepaying or making part-payments reduces the outstanding principal and can sharply cut total interest.
• In the early years most of each EMI is interest; the principal share rises over time.

Tax benefits on home loan EMIs

Under the old tax regime, the interest paid on a self-occupied home loan is deductible up to ₹2 lakh per year under Section 24(b), and the principal repaid qualifies for deduction up to ₹1.5 lakh under Section 80C. For a let-out property the interest deduction can be larger subject to set-off limits.

Most of these deductions are not available under the new tax regime. Comparing your loan’s deductible interest against the lower slab rates of the new regime is exactly the kind of decision a chartered accountant can help quantify.

Example: ₹25 lakh home loan at 9% for 20 years

On a ₹25,00,000 loan at 9% annual interest over 20 years (240 instalments), the monthly EMI is about ₹22,493. Over the full tenure you repay roughly ₹53.98 lakh, of which around ₹28.98 lakh is interest. Reducing the tenure to 15 years raises the EMI but cuts the total interest substantially — the trade-off the calculator helps you visualise.

For CA firms and advisors

Chartered accountants and advisors use EMI calculations to test a client’s loan affordability and EMI-to-income ratio, model cash flows, evaluate prepayment or balance-transfer scenarios and estimate the home-loan interest deduction. The figures here are indicative; the lender’s sanction terms always prevail.

Illustrative EMI on a ₹25 lakh loan at 9% p.a.