Working out your home loan EMI before you make an offer
How the monthly payment is calculated, what changes it most, and why the total cost of a loan is often larger than people expect.
Most people buying a house in Nepal borrow part of the price. The monthly payment, the EMI, is the number that decides what you can actually afford.
What goes into the payment
Three things set the EMI: the amount you borrow, the interest rate, and how long you take to repay. The amount you borrow is the price minus your down payment, so saving more up front lowers the payment twice over: you borrow less, and you pay interest on less.
Use the EMI calculator to try combinations before you talk to a bank.
The term cuts both ways
A longer term makes each payment smaller and the total larger. On a loan of Rs 80 lakh at 10 percent, stretching from 10 years to 20 years takes roughly Rs 28,000 off the monthly payment, and adds a great deal to the interest paid over the life of the loan. If you can carry the higher payment comfortably, the shorter term costs less overall.
Rates here usually move
Most home loans in Nepal are priced off a base rate plus a premium, and the rate is reviewed periodically. A payment that fits your budget at today's rate may not fit if the rate rises by two points. Work out the payment at a rate a little above the one you are quoted and check that you could still manage it.
What the calculator does not include
- Service and processing charges, usually a percentage of the loan
- Valuation and legal fees
- Insurance the bank asks for
- Registration charges on the transfer itself
Before you sign
Ask the bank for the rate, the review period, the fees, and whether you can make early repayments without a penalty. Being able to pay a lump sum when you have one shortens the loan and saves interest.
These figures are an estimate to help you plan. Your bank sets the final terms.
