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Money, explained

Short, plain-language guides. Written so you can read one over a cup of chai.

Loans · 4 min read

How your EMI is really calculated

An EMI is one fixed payment that covers both interest and a slice of the principal. Early on, most of it is interest; later, most is principal.

EMI = P × r × (1+r)n ÷ ((1+r)n − 1)

Here P is the loan amount, r the monthly rate (annual ÷ 12 ÷ 100) and n the number of months. For ₹10,00,000 at 9.5% for 10 years, the EMI is about ₹12,940. Try your own numbers.

Eligibility · 3 min read

FOIR: the ratio that decides your loan

FOIR means Fixed Obligations to Income Ratio: all your monthly EMIs divided by your monthly income. RayBank’s comfort limit is 50%.

FOIR = (existing EMIs + new EMI) ÷ monthly income

With a ₹1,00,000 income and ₹8,500 of existing EMI, you can add roughly ₹41,500 of new EMI. Check your eligibility.

Smart money · 5 min read

Prepay or invest? A two-minute test

If your loan rate is higher than what you can safely earn after tax, prepaying is a guaranteed win. If not, a SIP might do more for you.

  • Loan above 10%: prefer prepaying.
  • Loan 8–10%: split it.
  • Loan under 8% with a long horizon: consider investing.

Floating-rate home loans have no prepayment charges at RayBank. Ask Loan Buddy to quote the policy.