$
%
yrs
mos
A mortgage is a type of loan used to purchase real estate, where the property itself serves as collateral. The borrower agrees to repay the loan over a set period, usually 15 to 30 years, with interest. Mortgages are typically provided by banks, credit unions, or mortgage lenders. The loan amount, interest rate, and repayment terms depend on the borrower's creditworthiness, the type of mortgage, and the value of the property. Failure to make payments can result in foreclosure, where the lender can seize the property to recover the loan balance.
There are various types of mortgages available, including:
Equitable Monthly Installments (EMIs) are regular payments made by the borrower to pay off the mortgage loan. In the initial stages of the loan, a larger portion of the EMI goes toward paying interest, with the principal component increasing over time. EMIs help borrowers manage their mortgage repayments effectively, offering a fixed amount to pay each month for the duration of the loan term.
EMI is calculated using the following formula:
EMI = [P x R x (1+R)^N] / [(1+R)^N - 1]
Where P = Loan Principal, R = Monthly Interest Rate, and N = Loan Tenure in months.
A mortgage EMI consists of two main components: principal and interest. Initially, a larger portion of the EMI is applied toward paying interest. Over time, as the outstanding loan balance decreases, a greater portion of the EMI is applied to the principal. This amortization schedule ensures that the loan is fully repaid by the end of the term.
Mortgage tenure refers to the duration over which the borrower agrees to repay the loan, usually between 15 to 30 years. A longer tenure reduces monthly EMI amounts but increases the total interest paid over the life of the loan. Conversely, a shorter tenure increases monthly EMIs but reduces the total interest paid.
The interest rate is the percentage charged by the lender for borrowing the mortgage amount. It can be either fixed (remains constant throughout the loan term) or floating (varies with market conditions). The interest rate, along with the loan tenure, significantly affects the total cost of the mortgage and monthly EMI amount.
Prepayment refers to repaying the mortgage loan either partially or fully before the scheduled repayment date. This helps in reducing the outstanding principal, thereby reducing the overall interest cost and possibly shortening the loan tenure. Some lenders may charge a prepayment penalty, especially in the case of fixed-rate mortgages.
Our Mortgage EMI calculator on MoneyReload helps you estimate monthly payments based on loan amount, interest rate, and tenure, enabling better mortgage planning.
Enter the loan amount, interest rate, and loan tenure in the calculator, and the EMI amount will be calculated instantly. Users can adjust the values to see how changes affect the monthly repayment amount. The tool also allows users to assess the impact of prepayments on the loan schedule.
Unlike other tools, our calculator offers additional features such as amortization schedules, the impact of prepayments on loan repayment, and graphical representations of EMI components, allowing for more effective financial planning.
