Compare Mortgage Interest Rate Calculator

EMI Formula:

\[ EMI = \frac{P \times R \times (1 + R)^N}{(1 + R)^N - 1} \]

Principal Amount (P):

Interest Rate 1 (Annual %):

Interest Rate 2 (Annual %):

Loan Term:

years

EMI at %:

Monthly Difference:

Total Payment Difference:

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1. What is the EMI Formula?

The EMI (Equated Monthly Installment) formula calculates the fixed monthly payment made by a borrower to a lender at a specified date each calendar month. The formula accounts for both principal and interest components of the loan.

2. How Does the Calculator Work?

The calculator uses the EMI formula:

\[ EMI = \frac{P \times R \times (1 + R)^N}{(1 + R)^N - 1} \]

Where:

$ P $ — Principal loan amount ($)
$ R $ — Monthly interest rate (annual rate ÷ 12 ÷ 100)
$ N $ — Number of monthly payments (term in years × 12)
$ EMI $ — Equated Monthly Installment ($)

Explanation: The formula calculates the fixed monthly payment required to pay off a loan over a specified term, accounting for compound interest.

3. Importance of Comparing Mortgage Rates

Details: Even small differences in interest rates can significantly impact your monthly payments and total loan cost over time. Comparing rates helps you make informed decisions and potentially save thousands of dollars.

4. Using the Calculator

Tips: Enter the principal amount, two different annual interest rates, and loan term in years. The calculator will show you the monthly payment difference and total cost difference between the two rates.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with a lower interest rate?
A: The calculator shows exactly how much you'll save monthly and over the entire loan term. Even a 0.25% difference can save thousands over a 30-year mortgage.

Q2: Does this include property taxes and insurance?
A: No, this calculates only the principal and interest portion of your mortgage payment. Your actual monthly payment may include additional costs like taxes and insurance.

Q3: Are there other costs to consider when comparing mortgages?
A: Yes, consider closing costs, points, PMI, and other fees that may affect the overall cost of the loan.

Q4: How does loan term affect the monthly payment?
A: Shorter terms result in higher monthly payments but less total interest paid. Longer terms have lower monthly payments but more total interest.

Q5: Should I always choose the lowest interest rate?
A: While lower rates are generally better, also consider the lender's reputation, customer service, and any additional fees or conditions.