EMI = P × r × (1+r)ⁿ / [(1+r)ⁿ – 1], where P = principal loan amount, r = monthly interest rate (annual rate ÷ 12 ÷ 100), n = number of monthly instalments. This is the standard reducing balance method used by all RBI-regulated banks in India.

Banks typically allow maximum EMI up to 40-50% of net monthly income (called FOIR — Fixed Obligation to Income Ratio). For example, if your salary is ₹80,000, your total EMIs including new loan should not exceed ₹32,000-40,000. As a banker, I recommend keeping it below 35% for financial comfort.

Prepayment reduces your outstanding principal. You can either reduce your EMI amount (keeping tenure same) or reduce tenure (keeping EMI same). Reducing tenure saves more interest. Most banks allow prepayment for home loans without penalty as per RBI guidelines. For personal loans, check the prepayment clause — some banks charge 2-5% prepayment penalty.

As of 2026, home loan interest rates from major PSU banks (SBI, Bank of Baroda, PNB) range from 8.40% to 9.15% p.a. Private banks (HDFC, ICICI, Axis) charge 8.75% to 9.50%. Rates are linked to EBLR (External Benchmark Lending Rate) which is based on RBI repo rate. Check your bank’s website for the exact current rate as rates change periodically.

No — the standard EMI formula calculates only the principal and interest component. Processing fees (typically 0.5% to 1% of loan amount), GST on fees, insurance premium, and other charges are separate. Always check the total cost of credit (APR — Annual Percentage Rate) which includes all charges, not just the interest rate shown.