With the cost of real estate in India rising by the year, purchasing a house out of pocket can be financially strenuous for individuals. A home loan, in such cases, is a smart solution, as it allows the borrower enough time to repay the amount over a period. However, if you are planning to opt for a home loan to buy a house, using a housing loan EMI calculator may be a good idea before signing on the dotted line.
Here, we have a list of benefits of using a housing loan calculator. Read on!
What Is a Housing Loan EMI Calculator?
A housing loan EMI calculator is an online tool designed to help you find out the probable EMI or equated monthly installment amount (principal amount + loan interest) that you will need to pay every month toward your housing loan repayment.
Top Benefits of Using a Housing Loan EMI Calculator
Housing loan affordability largely depends on your EMI. It is, after all, the amount that needs to be paid on a monthly basis throughout the whole repayment tenor. Therefore, it is important to choose a lender who offers the most competitive home loan interest rates in the market. Getting affordable interest rates will ensure that the interest obligation toward your housing loan is restrained.
Listed below are the top benefits of using an online calculator for housing loan EMIs that potential borrowers must know of before applying.
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Helps Plan Your Repayment
Once you have an idea of how much you are comfortable borrowing based on the home loan interest rates, you can adjust the repayment tenor with an EMI amount you will be willing to pay. This will help you plan your budget and the repayment better.
Measuring regular expenses to analyze financial responsibilities and the scope of cutting back can be a smart move when planning your EMIs. That way, one can avoid all the stress throughout the home loan tenor and additional charges for bounced EMIs.
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Helps Determine the Right Amount
Using a housing loan interest calculator to evaluate your home loan EMIs in advance can help you determine an amount that best suits your budget. The housing loan calculator can be used for free to adjust interest rates and the tenor through various permutations and combinations to arrive at a suitable EMI. You can try out various combinations and modify the values until absolutely sure of the EMI that you are comfortable paying.
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Makes Prepayments Easier
Knowing your housing loan EMI before applying for the loan makes it easier to plan your prepayments. Home loan prepayments help reduce the payable interest so you can repay the loan sooner. For instance, you can save up more each month to coincide with the housing loan tenor or time your investments to easily plan home loan part-prepayments.
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Zero Restrictions on Usage
There are no limitations on the usage of the housing loan EMI calculator. The tool can be accessed as many times as needed, that too without having to pay any additional charges.
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No Room for Errors
Since the online calculator predicts the monthly EMIs based on a mathematical formula, one can rest assured that there is no room for mistakes or human errors, which are common in the case of manual calculations.
How to Calculate Housing Loan EMI Using an Online Calculator
Once familiar with the features and benefits of an online EMI calculator, you can calculate housing loan EMIs before sending out the application. The steps mentioned below can guide you through the procedure.
- Visit the website of your chosen lending institution and access the ‘Housing Loan EMI Calculator’ page.
- Select a preferred housing loan amount, say INR 50 lakh as your starting amount
- Choose a loan tenor of your choice in the next field. Considering home loan tenors typically extend beyond 15-20 years, let’s assume a tenor of 20 years.
- Select the housing loan interest rate as per the lender’s offering. Let’s assume a nominal interest rate of 8.25%.
- After entering all the values, the calculator will assess and display the total payable interest, principal amount payment, and the EMI.
The housing loan calculator follows a mathematical formula to give accurate, error-free results, which is as follows:
EMI = P x R x (1+R)^N / [(1+R)^N-1]
where
P = Principal amount
N = Loan tenor
R = Rate of Interest
Therefore, taking the example given above and based on the formula, the EMI would be INR 42,603 for a 50 lakh loan. The total interest payable would be INR 52,24,788.
Conclusion
A home again is an individual resource that you have longed for claiming for quite a while now. On the off chance that you are wanting to purchase a home, there are two things that you consider: a home and a not-really beautiful generally inescapable home credit. In any case, what makes the biggest difference is fitting the bill for the home credit. Moneylenders must survey your reimbursement capacity, which is basically assessed based on your profit, costs, investment funds, work profile, monetary ability and reimbursement history of credits and different levy. A terrible FICO rating and the phantoms from an earlier time, for example your credit obligations or unfortunate installment history can represent an issue while fitting the bill for a home credit. The following are 4 significant hints to check before you go for a home credit:
A believed credit department gets ready and keeps up with your credit records and offers it with the banks/moneylenders at whatever point an enquiry is made by the credit supplier. The higher the financial assessment, the higher the possibilities of the advance getting endorsed. And furthermore once can anticipate the best pace of interest on the home credit as a little something extra. Guarantee you check your FICO rating something like a half year, ideally a year, prior to you intend to purchase a home.
Almost all reputable lenders having an online presence offer a housing loan EMI calculator on their websites. In just 3 simple steps, housing loan EMI can be calculated using this tool. It is certainly one of the best ways to put a stop to your worries and make the smartest financial decisions.