Home loan applicants prefer SBI bank to apply for a home loan as it is a public sector lender. SBI requires its applicants to meet a set of eligibility criteria for the authorisation of their SBI home loan applications. If the application meets the eligibility criteria, SBI determines that the borrower will be able to repay the loan on time and will not default. If an applicant’s application does not meet the qualifying criteria, SBI will reject it, which will have a negative impact on their credit profile.
The eligible loan amount, or the amount you can borrow with an SBI home loan, is determined by a number of factors, including your income, existing loans, your age, employment status, as well as your credit score. When applying for an SBI house loan, your monthly income is a crucial factor in deciding the maximum loan amount you can get approval for, based on your income. SBI will usually approve your house loan application for roughly 85% of the property’s value in most situations. The remaining 20% would have to be paid out of the applicant’s pocket as a down payment. Similarly, the EMI on your SBI house loan is determined by your eligibility as the eligibility of the home loan determines your interest rate that the bank will charge on your home loan application. Your home loan interest rate has a direct influence in evaluating your home loan EMI. To be eligible for an SBI Bank interest rate offer, you must first be eligible for one.
SBI Home Loan EMI Calculation
SBI offers Low-interest home loans, with SBI home loan interest rate ranging from 6.80% to 7.40%. However, SBI considers a variety of factors while setting the interest rate for home loans. Moreover, the shorter your loan term, the higher your EMI, and vice versa. SBI takes into consideration their EMI calculator to calculate the EMI amounts. EMI calculators use a particular formula to calculate the EMI amount on the home loan. The formula is as follows:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
Where,
EMI = Equated Monthly Installment ,
P = Principal amount,
R = Monthly interest rate (Annual Interest Rate divided / 12 to get monthly interest rate), and
N = The number of monthly installments or the duration of the loan in months.
SBI EMI calculator uses this formula to evaluate your EMI amount on the principal loan amount that you are requesting from the SBI bank.
Methods to Reduce your Home Loan EMI
There are a few methods that you can use to reduce your EMI amount on your SBI home loan. Some of those methods are as follows:
1. Higher Loan Amounts
The higher your loan principal the lower your loan EMI and vice versa. Therefore, applying for a higher amount of home loan would result in comparatively lower EMI amounts. In case you have an existing home loan and your bank supports a top up facility then you can opt for a top up on your existing loan amount. This would result in lowering your EMI amounts.
2. Large Down Payments
Another way of reducing your home loan EMI is to make larger down payments on your home loan. Making high down payments while applying for a home loan means that your principal amount would be less resulting in lower EMI amounts. If you make large down payments then you will have to borrow less money and therefore would have to repay less amount as well in smaller EMI amounts.
These are the two methods by which you can reduce your EMI amounts while applying for a home loan.
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