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Home Loan EMI Calculator by Reducing Balance

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How to Reduce Interest/ Tenure?

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Loan Summary
Tenure reduced
Interest saved 316,182

Loan Payment Schedule

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2024
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Home Loan EMI by Reducing Balance

Home Loan EMI by Reducing Balance refers to a type of home loan where the Equated Monthly Installment (EMI) is calculated based on the outstanding principal balance, which decreases with each payment. This method, also known as the reducing balance method or diminishing balance method, offers flexible payments, reduced interest costs, and better control of your finances. Use our Home Loan EMI Calculator by Reducing Balance to plan your loan repayments and stay on top of your finances. Find accurate breakdowns of your payments, interest, and principal to plan your home loan better.

Calculate Home Loan EMI by Reducing Balance

  1. Enter home loan details including loan amount, interest rate, tenure, and choose months or years for your home loan EMI by reducing balance.
  2. Click Calculate to view your initial home loan EMI breakdown and calculate home loan EMI by reducing balance based on the inputs.
  3. Customize home loan payment options with three inputs.
  4. Select a number of extra EMIs per year for your home loan.
  5. Increase home loan EMIs by a percentage.
  6. Select a lump sum payment in a specific year for your home loan.
  7. Adjust inputs as needed and click Recalculate to dynamically update your home loan tenure and interest while calculating your home loan EMI.
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Reducing Balance EMI formula

To calculate Home Loan EMI, use the Reducing Balance EMI formula for precise results. This calculation helps you understand your repayment obligations clearly.
E M I = P × r × ( 1 + r ) n ( 1 + r ) n - 1
EMI = Equated Monthly Installments
P = Principal loan amount
r = Monthly interest rate
n = Number of monthly installments

Eligibility Criteria for Home Loan EMI by Reducing Balance

Stable Income: Applicants should have a stable and verifiable source of income, either through salaried employment or self-employment, to demonstrate their ability to repay the home loan EMI by reducing balance.
Creditworthiness: A good credit score is essential to qualify for a home loan EMI by reducing balance, reflecting a history of responsible credit behavior and repayment.
Employment Stability: Lenders typically require applicants to have a consistent employment history, ensuring a reliable income stream to support home loan EMI repayments.
Property Compliance: The property being financed through the home loan EMI must meet the lender's criteria, including clear title deeds, acceptable valuation, and compliance with local regulations.

Home Loan EMI Calculator by Reducing Balance FAQ

How does Flat Rate EMI differ from a Reducing Balance EMI?
Flat rate EMI calculates interest on the original principal amount throughout the loan term, resulting in fixed, equal monthly payments. In contrast, reducing balance EMI calculates interest on the outstanding principal, which decreases with each repayment, leading to gradually lower EMIs and typically lower overall interest costs.
How does the Reducing Balance EMI affect my total interest paid?
With reducing balance EMI, interest is calculated on the decreasing outstanding principal. As you make payments, the principal and interest decrease, leading to lower overall interest paid over the loan term.
What are the advantages of Reducing Balance EMI?
The reducing balance EMI method charges interest on the reducing principal, which lowers overall interest costs. It is fairer than flat-rate loans and allows for additional payments to further reduce interest.
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