About Andhra Bank
Andhra Bank has a history dating back to 1923, when it was established by a renowned freedom fighter, Dr. Bhogaraju Pattabhi Sitaramayya. Andhra Bank has a sizeable presence in the southern states of Andhra Pradesh, Telangana, Tamil Nadu, and Karnataka. Over 96 years, the bank has carved a niche among its customers and is considered one of the most trustworthy banks in the region.
The recent bank merger exercise saw the Government merging Andhra Bank and Corporation Bank with Union Bank of India. The combined entity will thus have a pan-India presence capable of serving an extensive clientele. Andhra Bank offers all kinds of loans to its customers, the most prominent of which is the Home Loan. Apart from providing one of the lowest rates of interest on Home Loans, Andhra Bank facilitates easy repayment options, as well. The Andhra Bank Home Loan EMI Calculator is unique as it performs multiple functions.
Andhra Bank Home Loan EMI Calculator
Andhra Bank has a Home Loan EMI Calculator on its website to help its customers with calculating their monthly liability on the Home Loans. The Andhra Bank Home Loan EMI Calculator is different from the others because it provides customers with an amortisation schedule. Apart from the EMI and amortisation schedule, the calculator provides information about the total interest repayable over the full tenure of the loan.
Andhra Bank Home Loan EMI Calculator - How to Use It?
Home Loan customers can use this EMI Calculator to confirm their monthly repayment obligations. The customer should provide the following information to get the EMI:
- The number of loan instalments
- The Home Loan amount
- The rate of interest
Click on the Calculate option to get your EMI and the interest payable on the loan for the full tenure. Clicking on the 'Chart' option helps the customer to understand the amortisation schedule that gives the breakup of interest and principal repayment every month.
Alternate Methods of Calculating Andhra Bank Home Loan EMI
MyMoneyMantra.com offers the services of an EMI Calculator on its website. The procedure for using the calculator is simple.
- Access the website, MyMoneyMantra.com
- Proceed to select Financial Tools
- Choose EMI Calculator
- Enter the necessary information
- Click on the 'Calculate' option to get the EMI
- The customer also gets information on the breakup of principal repayment and interest component for the entire tenure of the Home Loan.
Nowadays, no one does the manual calculation for determining the EMI. However, one should have an idea about the same for academic purposes.
EMI = [PR(1+R)^N] divided by [(1+R)^N-1]
Where P, R and N represent the principal loan amount, rate of interest per month, and the number of monthly instalments respectively.
MS Excel Formula
Using MS Excel formulas is a convenient way of determining the EMI.
Formula = PMT(rate, nper, pv) where PMT is the Excel notation for EMI
- Rate denotes the monthly ROI
- NPER represents the number of months scheduled for repayment
- PV is the principal loan amount
The Home Loan EMI Concept
The Home Loan is an extended obligation that could go on for a maximum of 30 years. In the initial stages, the interest component is high. Therefore, customers would not be able to afford the equated instalment mode of payment. The ideal repayment mode is the equated monthly instalment. Many people confuse between these two modes and think of them as the same. However, they are two diverse modes of repayment.
- Equated Instalments
In this mode of repayment, the lender divides the principal loan amount by the number of instalments. Thus, if the loan amount is 12 Lakhs and the repayment period is 120 months, the monthly repayment towards the principal component is 10,000. Apart from this fixed contribution, the borrower has to repay the interest for the particular month.
This concept has a fixed principal repayment component and a variable interest payment constituent. Therefore, the equated instalment is a variable entity. It is the highest at the start of the term. As you keep on repaying the instalments, it gradually reduces. Such a repayment mode is beneficial to the borrower, but it can be an inconvenient one.
One is that the repayment amount is high, and the other reason is the variable nature of the instalment. It becomes a challenge to maintain a monthly budget.
- Equated Monthly Instalments
Considering the challenges of the equated instalment mode of repayment, the lenders have come up with a new concept. It is known as the 'Equated Monthly Instalment' or EMI. In this concept, the instalment amount remains constant. It comprises of two variable components, the principal repayment part, and the interest constituent. The borrower ends up paying more in the EMI concept, but it is a convenient one because of the fixed nature of instalments.
Factors That Affect the EMI Calculation
EMI calculation requires the customer to provide information about the following:
- Home Loan amount - Directly proportional to EMI
- Rate of interest - In direct proportion with the EMI
- Loan repayment tenure - Indirect proportion with EMI
This example will explain things better:
|Rate of interest = 9%||Rate of interest = 10%|
|10 Lakhs||25 Lakhs||10 Lakhs||25 Lakhs|
Points to note
- As the loan amount increases from 10 Lakhs to 25 Lakhs, the EMI increases accordingly
- Similarly, an upward revision of the interest from 9% to 10% sees the EMI increasing, as well
- The EMI reduces as you extend the loan tenure from 60 months to 240 months
Andhra Bank Home Loan EMI Calculator - Benefits
- Knowing your EMI in advance helps to manage your budget
- Depending on your affordability, you can decide on the loan amount and tenure
- Plan your other activities by keeping the Home Loan obligation in mind
- Understand how much interest you end up paying over the full tenure of the loan
Factors That Affect the EMI Amount
- Change in the rate of interest
Andhra Bank follows the MCLR linked Home Loan interest rates. This rate structure is a floating rate whereby, it fluctuated along with the market rates. Any variation in the MCLR can affect the Home Loan interest rate. Therefore, there can be a change in either the repayment schedule or the EMI.
The problem arises when the rates show an upward trend. Andhra Bank prefers to maintain the EMI as constant because an enhanced EMI can throw the borrower's budgeting into disarray. It could lead to defaults. Therefore, Andhra Bank changes the loan tenure by extending it.
- Effect of PMAY Subsidy
PMAY Subsidy is a unique factor that can affect the EMI calculation. All PMAY borrowers are eligible for a Government grant in the form of an upfront interest subsidy into their loan account. This interest subsidy reduces the overall liability of the borrower. Hence, one should reduce the principal loan amount by the amount of grant before calculating the EMI.
- Flexible rates of interest Home Loans
Banks offer flexible rates of interest on Home Loans. Such rates remain fixed for an initial period following which they switch over to the floating mode. Such a situation requires the bank to recalculate the EMI at the time of the switchover.
- Effect of moratorium
There is a moratorium period on Home Loans sanctioned for construction purposes. The borrower usually has two options. One is to let the interest accumulate and add on to the principal amount. Under such circumstances, the EMI is calculated on the consolidated amount of the principal and the interest charged during the moratorium period. Alternatively, the borrowers can repay the moratorium interest every month. This arrangement is known as servicing of pre-EMI interest. The regular EMIs start after the final disbursement. Most of the EMI Calculators available do not have provisions to account for the moratorium period.
Andhra Bank Home Loan EMI - Income Tax Benefits
Housing is a priority activity in India. Hence, income tax benefits are available to individuals for repayment of Home Loan instalments. Sec 24 of the Income Tax Act deals with the interest portion of repayment. It offers tax concessions up to 2 Lakhs per annum per borrower on the repayment of the interest portion of the Home Loan. Similarly, tax benefits are also available on the repayment of the principal component. Sec 80C provides benefits up to 1.50 Lakhs on the repayment of the principal Home Loan amount.
Andhra Bank Home Loan EMI Calculator - FAQs
Can we get accurate results with the Andhra Bank Home Loan EMI Calculator?
Yes, the calculator is accurate, provided we give correct inputs.
How does the EMI calculated by me using the calculator differ from what the bank stipulates in the sanction letter?
Usually, the amount stipulated by the bank in its sanction letter is accurate. It takes various factors into account. The EMI payment date is a crucial factor. If it falls on the 10th of the month, the interest amount charged by the bank before the commencement of EMI is the Pre-EMI interest. If it is added to the Home Loan amount, the EMI will change. At the same time, the bank debits your loan account for the insurance premium (both property and life). If you reimburse the amount, there should not be a problem. However, many people prefer to add these amounts to the loan amount. Hence, EMI can change.
Is there any affect on the EMI because of prepayment of a Home Loan?
Prepayment of Home Loans occurs when the borrower deposits a lump sum of money into the Home Loan account. The primary objective of making a part prepayment is to save on the interest component. Under such circumstances, borrowers do not seek any changes in the EMI. They prefer to let the EMI continue as it is. However, the borrowers can request the bank to alter their EMI, if necessary. The EMI can change if the bank agrees to the borrower's request.
Will a delay in the payment of EMI affect my Home Loan EMI calculation?
Andhra Bank calculates the Home Loan EMI assuming that the borrower will pay the EMI regularly. In the case of a default or delay in repayment, the bank can charge penal interest. The interest is usually debited to the loan account. Ideally, the customer should clear this interest portion separately. If they do so, the EMI calculation does not get affected. Otherwise, there could be a change in the EMI.
How does Andhra Bank calculate Home Loan interest?
Andhra Bank calculates Home Loan interest on the daily reducing balances. Therefore, the borrower benefits the most by repaying the EMIs on time.
What does the amortisation schedule display?
The amortisation schedule displays the bifurcation of the EMI into principal repayment and interest repayment portion for the entire loan tenure. You also get information about the total interest you pay on your loan account.
Do all Home Loan EMI Calculators provide the amortisation schedule?
No, all Home Loan EMI Calculators do not offer the facility of the amortisation schedule. However, Andhra Bank Home Loan EMI Calculator has this facility of an amortisation schedule.
Why is the interest component high during the initial stages of the Home Loan?
The interest component of a Home Loan depends on the outstanding principal amount. In the initial stages of the Home Loan, the principal amount is high. Therefore, the interest component is also high. As you keep repaying the EMIs, the interest portion reduces.
Will the EMI Calculator help in determining the pre-EMI interest amount?
No, you have to contact the bank branch office to know about the pre-EMI interest amount.
Can I use the Home Loan EMI Calculator to determine my auto loan EMI?
Yes, all loan EMIs follow a similar principle. You can use the Andhra Bank Home Loan EMI Calculator to know your auto loan EMI amount.