Home Loan: How Much Will Be the EMI on a ₹40 Lakh Loan for 25 Years? Understand the Calculation Before Visiting the Bank

Owning a home is a dream for every individual. But with the rising property prices, buying a house has become a major challenge for the common man. In such a situation, a home loan becomes a helpful tool that enables people to fulfill this dream.

However, before taking a home loan, it's important to understand the interest rate, EMI (Equated Monthly Installment), and total repayment amount. This helps in proper financial planning and avoids future difficulties.

In this article, we will explain how much EMI you will have to pay if you take a ₹40 lakh home loan for 25 years from Bank of Baroda (BOB), along with the total interest payable. Let's understand the full calculation in a simple and clear way.

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The Dream of Owning a House and the Need for a Home Loan

In India, having one’s own home is a dream shared by almost everyone. But due to rising inflation and skyrocketing property prices, buying a home has become increasingly difficult. Even a simple 2BHK apartment in a metro city costs more than ₹50 lakhs.

So, most people rely on banks or housing finance companies to take a home loan. A home loan provides the required funds to purchase the house, and the borrower repays it in monthly installments (EMI) over a period of time.

But before taking any loan, it’s important to be fully aware of the interest rate and monthly EMI, as it directly affects your monthly income and savings.

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Where to Get the Cheapest Home Loan?

If you are planning to take a home loan, your first priority should be to check which banks are offering the lowest interest rates.

One of the most trusted and major public sector banks in India — Bank of Baroda (BOB) — is currently offering home loans at very attractive interest rates.

Bank of Baroda Home Loan Interest Rates:

• Starting Interest Rate: 8.40% per annum

• The rate may vary depending on your CIBIL score

• There may be special offers for women and professionals like doctors, engineers, etc.

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How to Calculate EMI? (Understand the Formula)

The formula to calculate home loan EMI is:

$$EMI = \frac{P \times r \times (1+r)^n}{(1+r)^n-1}$$

Where:

• P = Loan amount (Principal)

• r = Monthly interest rate (Annual rate ÷ 12)

• n = Loan tenure in months (years × 12)

This formula calculates the monthly installment that includes both principal and interest.

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Full Calculation for ₹40 Lakh Home Loan for 25 Years

Let’s now calculate the EMI using this formula:

• Loan Amount (P) = ₹40,00,000

• Annual Interest Rate = 8.40%

• Monthly Interest Rate (r) = 8.40% ÷ 12 = 0.007 (i.e., 0.7%)

• Loan Tenure (n) = 25 × 12 = 300 months

Plugging values into the formula:

$$EMI = \frac{4000000 \times 0.007 \times (1+0.007)^{300}}{(1+0.007)^{300}-1}$$

After calculation:

• EMI ≈ ₹31,940 per month

So, you will have to pay ₹31,940 every month to the bank.

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Total Repayment and Total Interest

Now let’s understand the total repayment and interest over the loan tenure:

• Total Payment = EMI × Total Months
  = ₹31,940 × 300 = ₹95,81,992

Out of this:

• Principal = ₹40,00,000

• Interest = ₹95,81,992 - ₹40,00,000 = ₹55,81,992

So, you’ll pay around ₹55.82 lakh as just interest over 25 years.

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Breakdown Table

Description	Amount
Loan Amount (Principal)	₹40,00,000
Monthly EMI	₹31,940
Loan Tenure	25 years (300 months)
Total Payment	₹95,81,992
Total Interest	₹55,81,992

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Why Choosing the Right Bank and Plan is Important?

While interest rate is a major factor, you should also consider:

• Processing Fees

• Pre-payment Charges

• Loan Transfer Options

• Bank’s Reputation and Customer Service

Choosing a bank with lower interest rates can help you save lakhs of rupees over time.

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5 Tips to Reduce Your Home Loan EMI

1. Make a Bigger Down Payment: The higher the down payment, the lower the loan amount.

2. Opt for a Shorter Tenure: You’ll pay less interest even though EMI may be higher.

3. Compare Interest Rates: Check offers from multiple banks and choose the lowest one.

4. Improve Your CIBIL Score: A score above 750 may get you a better rate.

5. Make Part Pre-payments: If you get a bonus or extra income, use it to reduce your loan.

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Conclusion: Always Calculate Your EMI Before Taking a Home Loan

Buying a house is an emotional and financial decision. To make it successful, careful planning and accurate calculation are a must.

A home loan can help you fulfill your dream, but you should always be aware of how much you’re paying monthly and in total. With banks like Bank of Baroda offering competitive rates, it's a great option — but only if you plan wisely.

Remember: Proper knowledge and smart choices will help you live in your dream home without unnecessary financial stress.