How to Calculate EMI on Home Loan Balance Transfer?

When you do a home loan balance transfer, you will get a new monthly installment amount. This is because the principal loan amount along with the rate of interest is changed. It is important to calculate the new monthly installment on your home loan balance transfer. With a new loan tenure and rate of interest, you need to make sure that you calculate your monthly installment according to your repayment capacity. It will not become a burden on you when you get a low home loan interest rate.

The home loan balance transfer includes a lot of procedures and steps, which are important to know. If you are doing it for the first time, here is how you can calculate your monthly installment on the home loan balance transfer process.

What is home loan EMI?

In a housing loan, the repayment scheme is equated to monthly installments. Individuals need to pay monthly EMI. The total principal loan amount and the rate of interest are added and divided by the number of months in the loan tenure. This gives a particular amount that the borrower needs to pay every month. This amount is fixed till the end of the housing loan term. It becomes easy to take a home loan just because of the EMI scheme. It is a hassle-free experience to complete the housing loan repayment scheme. The home loan EMI is decided by the individual depending upon the repayment capacity.

How to calculate the home loan EMI?

Formula: P x R x (1+R)^N / [(1+R)^N-1]

P = Principal amount

R = Monthly rate of interest

N = Loan tenure in months

It is easy to calculate the equated monthly installment when it comes to a home loan balance transfer. You need to calculate the balance transfer amount and if any new loan amount which you have taken is added to the rate of interest. Make sure you consider the rate of interest that is offered by your new loan provider. This sum of money can be divided by the number of months in the new loan tenure. In a home loan balance transfer, the loan tenure will be changed therefore, you need to divide the principal loan amount with a new loan tenure, this will give you a new monthly installment amount which is different from what you were paying previously.

Finishing up

Home loan documents required for a home loan for salary are different from self-employed individuals. Home loan eligibility criteria differ from individual to individual. Make sure you take a low home loan interest rate when you do a balance transfer.