Who This Scenario Is For
A 50 lakh home loan is typical for buying a 2-3 BHK apartment in Indian tier-1 and tier-2 cities. This loan amount is common for properties valued between ₹60 lakh to ₹85 lakh, where buyers make a down payment of 15-40% and finance the rest.
This scenario is relevant for mid-career professionals, families buying their first home, or those upgrading to a larger property. Understanding the EMI and total interest helps you plan your budget and choose the right loan tenure.
For a 50 lakh home loan at 8.5% annual interest for 20 years, your monthly EMI would be approximately ₹43,391.
Loan Summary
| Loan Amount (Principal) | ₹50,00,000 |
| Interest Rate (Annual) | 8.5% |
| Loan Tenure | 20 years (240 months) |
| Monthly EMI | ₹43,391 |
| Total Interest Paid | ₹54,13,840 |
| Total Amount Paid | ₹1,04,13,840 |
EMI Comparison Across Different Tenures
See how loan tenure affects your monthly EMI and total interest for the same 50 lakh loan at 8.5% interest:
| Tenure | Monthly EMI | Total Interest | Total Payment |
|---|---|---|---|
| 10 years | ₹61,903 | ₹24,28,360 | ₹74,28,360 |
| 15 years | ₹49,247 | ₹38,64,460 | ₹88,64,460 |
| 20 years | ₹43,391 | ₹54,13,840 | ₹1,04,13,840 |
| 25 years | ₹40,116 | ₹70,34,800 | ₹1,20,34,800 |
| 30 years | ₹38,419 | ₹88,30,840 | ₹1,38,30,840 |
Key Insight: Reducing tenure from 30 years to 20 years increases EMI by only ₹5,000/month but saves ₹34 lakh in interest over the loan period.
Year-Wise Principal vs Interest Breakdown (20-Year Loan)
See how your EMI payment is split between principal and interest over time:
| Year | Principal Paid | Interest Paid | Balance |
|---|---|---|---|
| Year 1 | ₹98,500 | ₹4,22,192 | ₹49,01,500 |
| Year 5 | ₹5,89,670 | ₹20,13,850 | ₹44,10,330 |
| Year 10 | ₹14,63,840 | ₹37,42,800 | ₹35,36,160 |
| Year 15 | €28,08,420 | ₹49,95,300 | ₹21,91,580 |
| Year 20 | ₹50,00,000 | ₹54,13,840 | ₹0 |
Understanding This Breakdown
Why Is Total Interest More Than Principal?
At 8.5% interest over 20 years, you pay ₹54 lakh in interest on a ₹50 lakh loan. This happens because interest is calculated on the outstanding balance, and in the early years, most of your EMI goes toward interest, not principal.
In year 1, only ₹98,500 of your ₹5.2 lakh annual payment goes to principal. The rest (₹4.22 lakh) is interest. Over time, as the principal reduces, more of your EMI goes toward principal repayment.
How EMI Is Calculated
EMI uses this formula: P × r × (1+r)^n / [(1+r)^n - 1]
- P = Principal loan amount (₹50,00,000)
- r = Monthly interest rate (8.5%/12 = 0.00708)
- n = Loan tenure in months (20 years = 240 months)
This gives you a fixed EMI of ₹43,391 that remains constant throughout the loan period.
Choosing the Right Tenure
Shorter tenure (10-15 years): Higher EMI, but significantly lower total interest. Suitable if you have stable high income and want to clear debt faster.
Longer tenure (20-30 years): Lower EMI, easier on monthly budget, but you pay much more in interest. Better for younger buyers or those with other financial priorities.
At 50 lakh loan amount, the difference between 20 and 30 year tenure is ₹5,000/month in EMI but ₹34 lakh in total interest.
Tax Benefits on Home Loan
- Interest deduction: Up to ₹2 lakh per year under Section 24(b)
- Principal deduction: Up to ₹1.5 lakh per year under Section 80C
- In year 1 of this loan, you pay ₹4.22 lakh interest — you can claim ₹2 lakh, reducing your taxable income
- This tax benefit is only available in old tax regime
Why Your Actual EMI May Differ
- Interest rates vary by bank (currently 8%-9.5% for home loans)
- Your credit score affects the interest rate offered
- Some banks have floating rates that change with RBI policy
- Processing fees (0.5-1% of loan) are charged upfront
Want Your EMI Based on Your Loan Details?
Interest rates and loan amounts vary. Use our calculator to get precise EMI based on your specific loan amount, interest rate, and preferred tenure.
Use EMI CalculatorFrequently Asked Questions
Can I afford ₹43,000 EMI on 10 LPA salary?
At 10 LPA, your in-hand is approximately ₹70,000/month. Financial advisors suggest keeping EMI below 40-50% of in-hand salary. At ₹43,000 EMI, you're at 61%, which is high. A 15 LPA salary (₹1 lakh in-hand) would be more comfortable for this loan.
Is 8.5% interest rate good in 2026?
As of 2026, home loan rates in India range from 8% to 9.5% depending on the lender and your credit profile. 8.5% is mid-range. Government banks often offer lower rates (8-8.5%) while private banks range from 8.5-9.5%.
Should I go for 20 years or 30 years tenure?
Choose 20 years if you can comfortably afford ₹43,000 EMI. You'll save ₹34 lakh in interest. Choose 30 years (₹38,000 EMI) if you need lower monthly burden or have other financial goals. You can always prepay to reduce tenure later.
What happens if interest rates change during my loan?
If you have a floating rate loan, your EMI will increase or decrease when RBI changes rates. Banks typically adjust your tenure rather than EMI amount, but you can request to change EMI instead.
How much tax benefit will I get on this loan?
In year 1, you pay ₹4.22 lakh interest. You can claim ₹2 lakh deduction under 24(b). If you're in 30% tax bracket, this saves ₹60,000 in tax annually. Principal repayment (up to ₹1.5L) also qualifies for 80C deduction.
Can I prepay this loan to reduce interest?
Yes. Most banks allow prepayment without penalties. Even ₹50,000 annual prepayment can reduce your loan tenure by 3-4 years and save lakhs in interest. See our prepayment scenario for detailed calculations.
What is the maximum loan I can get for a property?
Banks typically offer up to 80-90% of property value as loan. For a property worth ₹60 lakh, you can get ₹48-54 lakh loan. You need 10-20% as down payment plus 2-3% for registration and other costs.