How EMI is calculated for loan against property?

The EMI or Equated Monthly Instalment for a loan against property is calculated based on the loan amount, interest rate, and tenure of the loan using the formula:

EMI = [P x R x {(1+R)^N}] / [(1+R)^N-1]

Where,

• P is the loan amount or principal
• R is the monthly interest rate calculated as the annual interest rate divided by 12
• N is the loan tenure in months

For example, if you take a loan of ₹30 lakhs against property for 15 years (180 months) at an annual interest rate of 9.5%, the EMI will be calculated as:

P = ₹30,00,000

R = 9.5%/12 = 0.79% per month

N = 180 months

Entering this in the formula:

EMI = [30,00,000 x 0.79% x {(1+0.79%)^180}] / [(1+0.79%)^180 - 1]

The EMI works out to ₹31,327 (approximately).

Typically, the longer the tenure, the lower the EMI. However, the total interest outgo is higher. It is advisable to opt for a tenure that fits your repayment capability.