Equated Monthly Installments (EMI) are a mode of repaying debts to banks or NBFC lenders. The EMI amount is decided based on the principal amount, interest rate, and loan tenure. EMI is calculated by the lender and the borrower is made aware of the terms & conditions for repayment of the loan at the start of loan cycle.
There are two interest rate models used by banks and lenders, the fixed interest rate model and floating interest rate model. If the loan is taken on a fixed interest rate model, the EMI amount also remains fixed throughout the loan tenure. However, in some home loan plans, interest rate is fixed only for a certain period of time. Specific details are mentioned in the offer letter of the home loan or can be discussed with the bank representative. If the loan is taken on a floating interest rate model, the effective interest rate fluctuates when the “Base Rate” of the home loan changes. Changes in the base rate are due to fluctuations in the market. The RBI changes the base rate to counteract fluctuating market forces. When there is a change in the floating interest rate of the home loan, it could also change the EMI amount. ICICI bank’s interest rate is based on Marginal Cost based Lending Rate (MCLR).
The Fincity EMI calculator accurately estimates your future home loan EMIs based on your chosen input for the principal amount, interest rate, and loan tenure. You can calculate your EMIs for different borrowing scenarios right here.
Why should I use EMI calculator for ICICI Bank housing loan?
If you are planning to purchase a home on installments, a good first step is to estimate how much you could owe on a monthly basis by using Fincity’s EMI calculator. A crucial step in financial planning is to know the estimated EMI amount beforehand. This can also help you during your home loan application process as you can find a tenure you’re comfortable with – well in advance. To determine the right loan tenure, just experiment with the EMI calculator. In the calculator below, input any principal amount you want, interest rate can be around 8% (subject to change for your particular borrowing profile), and loan tenure as 10 years. Then, with the same principal amount and interest rate, change just loan tenure to 15 years. This way, you’ll see what the EMI amount will be – per month – for the next 10 years. Similarly, you can set the tn loan tenure to any number of years to know the EMI you will have to pay in each scenario. This way, you can determine the right loan tenure for yourself.
How to use ICICI bank home loan EMI calculator?
Follow this step-by-step process to use the Fincity EMI calculator and get a rough idea of your future EMIs.
Step 2 – Enter the loan amount that you intend to borrow in your home loan with ICICI bank.
Step 3 – Enter the applicable interest rate and loan term. Hit the ‘Enter/Return’ key. Your monthly EMI is automatically calculated and displayed on the screen.
Break-up of total payment is also shown – Principal Amount, Interest Payable and Total Amount.
Calculate ICICI bank home loan EMI
To understand how the EMI amount fluctuates in different borrowing scenarios, refer to the table below. As you can see, longer the loan tenure, the lower the EMI amount – for the same Principal at the same Interest Rate. However, it’s important to keep in mind that while the monthly payment might be lower, the applicant will end up paying a larger overall amount for a longer tenure.
Example: If the Principal (amount borrowed) is Rs.10 lakh, and rate of interest is 6.75%:
Home loan tenure
10-year home loan
15-year home loan
20–year home loan
25-year home loan
Total amount paid to ICICI bank (Principal + Interest)
Total interest paid during the loan tenure
How to reduce EMI on ICICI bank home loan?
Follow best practices for credit behavior
Create an emergency fund
There are times when expenses are higher than the income. In such times, emergency funds can bail an individual out of a financially negative situation. When there are no emergency funds on which one can rely, one turns to borrowing. This leads to increased debt and banks do not favor borrowers who rely too much on credit. Over-dependency on credit displays credit hungry behavior and reduces the CIBIL score.
On-time payment of EMI
Paying EMIs on time as agreed with the lending institution displays responsible credit behavior. When EMI payments are not made on time, it negatively affects the credit score of an individual. Therefore, it is advisable to pay the due in full and on time for the credit card due and any loans taken.
Create a mix of borrowings
Create a mix of secured loans and unsecured loans. Taking only unsecured loans like home loans, personal loans, or using credit cards creates too much of unsecured loan balance. This makes the lending institutions like banks and NBFCs wary of extending credit. Create a healthy mix of car loan, loan against jewelry, etc. (secured loans) along with home loan and credit card to have a mix of secured and unsecured loans.
Do not miss payment of EMI
If the home loan applicant misses an EMI, it is noted as a default. Each default on payment is noted in the credit history of an individual. This brings down the credit score and is also viewed in a negative light when the individual approaches banks to borrow in the future. The credit score is one of the most important criteria while determining loan eligibility for future loans. Hence, it is important to consistently maintain high CIBIL scores and avoid mistakes that bring down the credit score. Home loan applicants should check their credit score regularly. If any discrepancy is found in the credit report, it has to be reported to the CIBIL authorities immediately for correction and changes.
Follow best practices for EMI repayment
Consider other charges on home loan apart from EMI amount
In addition to interest rates, banks/NBFCs levy other charges for processing home loans. It is important to consider all the charges that the bank levies on the home loan. This gives a complete picture of the amount to be paid to the bank. Other charges include pre-payment charges, foreclosure charges, CIBIL score check charges, processing fees, etc. It is to be noted that all the charges carry a GST of 18%.
Keep a tab on credit card dues
If the home loan applicant has an active credit card, it is wise to clear off credit card dues on time. An easy way to pay off outstanding dues on multiple credit card is to convert them into EMIs by contacting the bank and consolidating the multiple debts into one loan. This is a way to consolidate multiple outstanding debts into one. The longer one’s credit card dues remain unpaid, the more interest accumulates on them. It is also to be noted that interest rates on credit cards are much higher than on home loans. Therefore, it is best to pay off credit card dues as and when they are due for payment.
Pick the credit to be paid off first
If the home loan applicant is currently paying off more than one active loan, it is wise to pick which loan needs to be repaid first. Choose the loan with the highest rate of interest to be paid off first. This is because accumulated interest works up to a huge amount when talking about multiple outstanding loans, and also when dues are not paid on time, penalties are levied.
Make your EMI payment on time
Timely EMI payments eliminate penalty charges and also help increase an individual’s CIBIL score. However, if EMI payments are delayed, the credit score of the home loan applicant is adversely affected. If the borrower has a strong reason for not being able to pay EMIs for reasons such as job loss or death of co-borrower, the borrower must inform the bank manager about the same. Banks usually give a breathing time up to 6 months, which means the borrower can skip paying EMIs for 6 months and resume it on the 7th month. It is to be noted that it is only a breathing time and not a waiver of EMI.
Standing instructions method of EMI payment
Standing instructions (SI) means orders/instructions given in advance to the bank for EMI payment. SI are usually given to either auto-debit a bank account at certain intervals, or to credit/pass cheques. In auto-debit method, the home loan customer links a bank account to his loan account. He can then instruct the bank to auto-debit the EMI from the linked bank account every month. Borrower can also fix a stipulated date for auto-debit each month.
In the post-dated cheque method, the home loan customer writes post-dated cheques and hands it over to the bank. Each cheque is dated for encashment for a specific date. Banks cash the cheques so that they receive the EMI payment on time. It is important to make sure that the bank account from which money will be debited to pay for home loan EMI should have sufficient funds for debit to take place. If the cheque bounces or the auto-debit does not go through, there will be a delay in payment – which in turn results in penalty charges.
Choosing a longer loan tenure
The longer the loan tenure, the lower the EMI and vice versa. Use the home loan EMI calculator to find the EMI to be paid for different loan tenures. There are three input fields in the EMI calculator – principal amount, loan tenure and interest rate. The calculator will compute the EMI amount in different borrowing scenarios based on the input provided. The applicant can also get to know the EMI amount for different loan tenures at the same principal amount. For instance, if you have input the tenure to be 5 years initially, you can change it to 10, 15 and 20 years. The home loan applicant can decide on the final loan tenure based on the EMI amount he/she is able to pay comfortably month-on-month. The applicant can choose the right loan tenure after this exercise on home loan EMI calculator.
Budgeting tips for managing money
Formulate a monthly budget
List monthly expenses versus monthly incomes. One should be able to save any amount of money after accounting for regular monthly expenses. Thorough scrutiny of all existing expenses will reveal some expenses that can be done away with. Even a small amount of money that is saved month-on-month turns out to be a large sum of money at the end of the year.
Assess current finances
Unless the home loan applicant is aware of his/her current financial situation, it is not possible to improve it. Writing down all the expenses is a good place to start the assessment of finances. Include all the expenses no matter how trivial they may seem. Every Rupee counts when it comes to managing money. The idea is to make sure that the expenses are at a minimum and there is a savings fund.
Get an insurance cover
Health insurance and life insurance are the most important insurance covers that an individual should have. Apart from this, any asset that is of significant value and which could cost large sums when in repair should be insured. For instance, home insurance and vehicle insurance. Having assets insured gives a peace of mind when one knows that his/her direct financial liability is limited.
Create an emergency fund
Having an emergency fund to fall back on helps in avoiding debt. Having an emergency fund reduces one’s liability to borrow from banks and NBFCs thus reducing dependency on credit. Also, having an emergency fund brings with it the peace of mind of being able to manage tough situations without having to worry about the monetary aspect.
Opt for a lower loan amount
It is wise to opt for a loan amount that covers the expense in question. Opt for higher loan amount only when it is absolutely necessary so there are no issues during repayment. The lower the principal borrowed, the lower will be the EMIs.
Check EMIs on different loan amounts
Gain an understanding of the home loan EMI before getting a home loan. Refer to the table below to get an insight into EMIs for different principal amounts and loan tenures. This is helpful in deciding the loan amount and loan tenure that one can opt for based on the EMIs.
Assuming the rate of interest is 6.85% p.a:
Amount of loan/Tenure
EMI for Rs.10 lakh
EMI for Rs.15 lakh
EMI for Rs.20 lakh
EMI for Rs.25 lakh
What are the penalty charges for non-payment of ICICI bank Home Loan EMI?
Charges for late payment of ICICI home loan are as follows:
2% per month
Overdraft – 1.5% of the outstanding home loan amount
Minimum of Rs.500 and maximum of Rs.5,000
ICICI bank home loan EMI calculator FAQ
What does home loan EMI mean?
Home loan EMI refers to equated monthly installments which are paid by the borrower to the lender for the home loan availed by the borrower.
Why should I calculate EMI for my ICICI bank home loan?
Before taking a home loan from ICICI Bank, the home loan applicant should calculate his/her future EMIs to be able to manage monthly budget. It also helps in deciding the principal amount to be borrowed and loan tenure of the home loan to opt.
How is the principal and interest paid through EMI?
When a bank lends a home loan, it calculates the total value of principal + interest it will stand to earn based on the tenure of the loan. This large amount is then divided into monthly installments called EMIs.
Every EMI has two components – the interest and the principal being repaid. In the initial years of the home loan repayment, the proportion of interest being paid off in the same EMI amount is higher than the amount of principal being paid off. Over the years, the proportion of interest is reduced and more funds are allocated towards clearing off the principal component
Total EMI is calculated based on the chosen tenure of loan, principal amount and rate of interest. In floating rate of interest model, the EMI amount rises or falls based on fluctuations in the “base rate”. The effective interest rate changes when there is a change in the base rate. Base rate is given by the RBI to the bank, and fluctuates when there are fluctuations in the market. Changes in base rate usually happen at the first week of every quarter. The home loan applicant can request to be informed in case of any fluctuations in floating interest rate via e-mail or SMS.
Can I claim income tax benefit on payment of my ICICI bank home loan EMI?
Yes, you can claim income tax benefit under different sections of the Income Tax Act, 1961. Under Section 80(C), Rs.1,50,000 p.a. is exempted on the principal amount repaid. There is a condition to claim this exemption – you should not sell the property for 5 years from the date you claim this.
Under Section 24, if the property is occupied by the applicant, a maximum of Rs.2,00,000 p.a. can be claimed towards repayment of interest amount for the home loan. For let out property, there is no upper limit for claiming interest. You can use your home loan statement to file Income Tax Returns.
If I make a pre-payment on my ICICI bank home loan, will my EMI change?
Pre-payment charges are applicable only on ICICI bank home loans with a fixed interest rate. Based on the type of home loan that you have taken, pre-payment charges range between 2%-4% plus 18% GST.
There are no pre-payment charges for ICICI bank home loans with floating interest rates.
Should I reduce my EMI or my loan tenure when I make a pre-payment of ICICI bank home loan?
If you reduce the amount of EMI of your ICICI bank home loan, your loan tenure will remain the same. Whereas, when you reduce your loan tenure, you can save up on the interest paid for longer loan tenure. Opting for reduced loan tenure is a wise option as the loan will be repaid faster with a lesser interest.
How can I pay my ICICI bank home loan EMI online?
You can pay your ICICI bank home loan EMI through internet banking of your savings/current bank account. You can also set-up standing instructions to auto-debit your bank account for payment of EMI.
*Fluctuating variable information represented here – contingent upon regulatory and market factors like all forms of amounts, variables, rates, percentages, tenures, products, fees, criteria, links, references, Sections of Acts, etc. – are subject to change in events like – revision/addition of RBI guidelines, revision of policies at the bank level, new information becoming available, etc. – and consequently the views and opinions shared here are of the writer’s inference of the most recently updated information as understood from authentic and reliable sources on the internet at the time of writing. Readers are advised that all end-case forms of amounts, variables, rates, percentages, tenures, products, criteria, fees, references, advice, etc. are contingent on external factors that are subject to change over time.