How EMI is calculated
EMI (Equated Monthly Instalment) uses the formula: EMI = P × r × (1+r)^n / ((1+r)^n - 1), where P is the principal, r is the monthly interest rate (annual rate / 12 / 100), and n is the total number of monthly payments (years × 12). Even a small difference in interest rate makes a big difference over long terms — on a 25-year £250,000 mortgage, the difference between 5% and 5.5% is over £25,000 in total payments.
Tips for borrowers
Always compare offers from multiple lenders. Consider making extra payments to reduce total interest. A shorter term means higher monthly payments but significantly less interest overall. Use this calculator to compare different scenarios before committing. For other calculations, try the percentage calculator.