Home Loan For Beginners [Excel Calculator]

If you are buying a new house or resale flat on home loan as a beginner, you should know how EMI is calculated, what is the impact of interest rate and tenure selected, how to save the interest amount in home loan and what is prepayment. It is important to understand that the sooner try to close the home loan, the better your financial stability will be over long term. Since home loan EMI covers majority of your debt throughtout the loan tenure.

Download the Home Loan Excel Calculator using below button:

Let us understand more about Home Loan for Beginners.

Table of Contents

Home Loan for Beginners Video
Home Loan Calculation Method
How to Save Home Loan Interest?
- Home Loan Prepayment Video
Tax Benefits on Home Loan
What is the 20 30 40 rule for home loan?
How much salary is required for a 30 lakh home loan?
Conclusion

Home Loan for Beginners Video

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Above video helps you to understand the Home Loan EMI Calculation based on interest rate and tenure. Let us now understand the impact of principal amount in home loan in detail.

Home Loan Calculation Method

When you buy a new house using Home Loan as a Beginner, the loan EMI amount is calculated using the Principal Amount (Loan Amount), interest rate and tenure
The interest rate is usaully between 6.5% to 9% based on the bank from which you ar etaking home loan and your credit score
A good credit score can provide you lower interest rate in home loan
Higher Loan amount means you need more time to payback the home loan, so you need to cover most of the home buying amount via down payment, to lower the loan amount
High interest rate will also increase the interest amount you need to pay while paying the Home Loan EMI
Also, longer tenure will make you pay the loan EMI for long term thus paying high interest amount in your home loan
Home Loan EMI = Principal Amount + Interest Amount
Your monthly installment (EMI) consists of 2 components – Principal Amount and Interest Amount
Based on the tenure and interest rate, the principal amount is low initially and increases with time.
Interest amount is high initially but decreases over time
So majority of the interest amount is taken from you during the initial phase of your home loan

Use Home Loan EMI Calculator to calculate home loan EMI with interest amount

How to Save Home Loan Interest?

You can save home loan interest amount by following multiple steps during different phase of the home loan:

Low Interest Rate: The low interest rate can help you save loan interest amount that you need to pay in the loan EMI
Lower Tenure: Less tenure can help you to close your loan in less time, thus saving the loan interest amount
Loan Prepayment: Home Loan Prepayment is a way to reduce the principal amount remaining in the home loan. This reduces the interest amount that is calculated every month during your Loan EMI payment

Watch below video on home loan prepayment

Home Loan Prepayment Video

Tax Benefits on Home Loan

You get Tax Benefits when paying home loan EMI:

Section 80C: This allows you to claim the principal amount in the home loan you pay. You can download the excel calculator for home loan from the top of this article to know how much principal amount can be claimed under this section for a financial year. Section 80C allows maximum limit of Rs. 1.5 Lakh to that can be claimed with old tax regime
Section 24: This section helps to claim the interest amount you pay in the home loan EMI every month. Again, the excel calculator can help you to know the total interest amount you can claim to save the Tax. The limit in this section is Rs. 2 Lakh in a financial year

What is the 20 30 40 rule for home loan?

So if you are a beginner as far as home loan is considered, 20 30 40 rule can be followed by you:

20% rule: Based on 20% rule, you should make a downpayment of at least 20% and take remaining 80% as loan. Also, the tenure of home loan should be kept within 20 years
30% rule: Your monthly loan EMI should not be more than 30% to manage the finances and monthly expenses
40% rule: Aim to Save at least 40% of your monthly income so that you handle the finances on monthly basis

So this is the 20 30 40 rule that you can follow for better financial stability

How much salary is required for a 30 lakh home loan?

Based on the calculations, for a 30 lakh home loan, your salary must be between Rs. 50,000 to Rs. 75,000 on monthly basis. Usually the EMI amount that is calculated based is based on your monthly salary and the EMI must not be more than 50% of your monthly income, so for 30 lakh loan the range of salary must be between Rs. 50,000 to Rs. 75,000.

This income can also be the total househole income if your spouse also earns along with you, than both the incomes can be added.

Conclusion

So as a beginner, your home loan emi Calculation method becomes very important to understand how loan works for you and how the interest is calculated on monrhtl basis. The interest rtae, tenure and principal amount plays crucial role to calculate the total interest amount you need to pay for home loan.

With low interest rate, lower tenure, the interest amount can be save in home loan for long term. You can download the home loan excel calculator to plan for your loan payments.

Some more Reading:

Save Home Loan Interest Amount!

Use Home Loan Excel Calculator that will help you to Save Interest Amount on Home Loan EMI.
Click below button to download Home Loan EMI and Prepayment Calculator in Excel:

Watch how Home Loan Calculator in Excel Works

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