1. What is the EMI Formula?

The EMI (Equated Monthly Installment) formula calculates fixed monthly payments for loans where payments include both principal and interest. It's widely used for mortgage calculations in Australia.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Principal loan amount (AUD)
• \( R \) — Monthly interest rate (annual rate divided by 12, in decimal)
• \( N \) — Loan tenure in months

Explanation: The formula accounts for compound interest over the loan period, ensuring each payment contributes to both principal and interest.

3. Importance of EMI Calculation

Details: Accurate EMI calculation helps borrowers understand their repayment obligations, compare loan offers, and plan their finances effectively.

4. Using the Calculator

Tips: Enter principal amount in AUD, annual interest rate in percentage, and loan tenure in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is the monthly interest rate calculated?
A: Annual rate is divided by 12 (months) and converted to decimal (e.g., 6% becomes 0.005).

Q2: Does this include other loan fees?
A: No, this calculates only principal and interest. Additional fees may apply to actual loans.

Q3: What's a typical mortgage term in Australia?
A: Most home loans have 25-30 year terms, but shorter terms reduce total interest paid.

Q4: Can I make extra repayments?
A: Many Australian lenders allow extra repayments which can reduce total interest and loan term.

Q5: How does offset account affect repayments?
A: Offset accounts reduce interest calculations but don't change the EMI amount (they shorten loan term instead).