Calculating home loan interest involves understanding three key factors:
the loan amount, the interest rate, and the loan tenure. Here are the steps to calculate home loan interest
Determine the loan amount:
The loan amount is the total amount of money borrowed from the lender to purchase the home. For example, if the home costs $500,000 and you are borrowing $400,000, then the loan amount is $400,000.
Find the interest rate:
The interest rate is the rate at which the lender will charge interest on the loan amount. This rate is usually expressed as an annual percentage rate (APR). For example, if the interest rate is 4% per annum, then the monthly interest rate would be (4/12)%.
Determine the loan tenure:
The loan tenure is the duration for which you will be paying back the loan. This is usually expressed in years. For example, if the loan tenure is 20 years, then the total number of monthly payments would be 240 (20 x 12).
Use a loan amortization calculator:
To calculate the home loan interest, you can use a loan amortization calculator. This type of calculator will take into account the loan amount, interest rate, and loan tenure to calculate the monthly payment and the total interest payable over the loan tenure.
Alternatively, you can use the following formula to calculate the EMI (Equated Monthly Installment) which includes both principal and interest:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
P = Loan amount
R = Monthly interest rate
N = Number of monthly payments
Once you have calculated the EMI, you can then determine the total interest payable over the loan tenure by subtracting the loan amount from the total of all the EMI payments