After opting for a home loan, a borrower requires to repay his/her loan through EMI or Equated Monthly Instalments. A home loan EMI calculator is an online tool that lets users easily calculate their monthly obligations.
A borrower can use this calculator to plan their home loan repayments. It helps in determining the EMIs and assists in making an informed decision. A home loan EMI calculator provides a host of benefits allowing every borrower to plan their home loan and repayment tenure accurately.
Six benefits of a home loan EMI calculator in India
Here are some benefits of a home loan EMI calculator that makes it an essential tool for financial planning:
- Allows easy and fast calculation
To calculate the home loan EMI, borrowers only need to enter their loan amount, interest rate, processing fee and repayment tenure for fast calculation. It is a simple and quick process that requires minimal time to display results.
- Ensures accurate and faster results
Manual calculations lead to more errors, but a home loan EMI calculator always provides accurate data as the entire process is done by a machine. Hence, to avoid mistakes in calculation, using an EMI calculator is always the better choice.
- Helps in determining the loan amount
Calculating EMIs before a borrower applies for a home loan helps significantly in deciding the exact loan amount that fits their monthly budget. As a result, borrowers can plan a loan amount that they can comfortably repay within the stipulated tenure.
- Assists in loan repayment planning
Prior knowledge of EMIs and what the interest rate of a home loan is helps a borrower monitor their expenses and determine their crucial financial obligations. For example, if they know their EMI obligations, they can plan monthly savings and make part payments effortlessly.
- Guides in planning pre-payments
If a borrower has knowledge of EMIs, he/she can also proceed with pre-payment planning, which will lower his/her total interest outgo. This means if a borrower knows about the EMI obligation, he/she can arrange for extra monthly savings and make easy part-prepayments.
- Assists with comparing different lenders
As the results provide a total amount that borrowers can acquire, they can choose a lender providing better loan terms.
When making a financial plan for purchasing a house, one will come across pre-approved offers provided by different financial institutions. These allow a borrower to check his/her home loan eligibility and get faster access to a loan. One can check his/her eligibility for a pre-approved offer by just providing his/her name and contact information.
Many financial institutions also offer home loan eligibility calculators on their websites to help loan applicants.
How to use a home loan EMI calculator?
Using a home loan EMI calculator is very simple. Borrowers must follow these steps to calculate a home loan EMI:
Step 1: Enter the loan amount that an individual needs to borrow.
Step 2: Put in the decided tenure.
Step 3: Lastly, enter the interest rate according to a chosen lender.
After entering the following details, the home loan EMI calculator will automatically display the monthly instalments within a few minutes. Borrowers can keep changing the numbers to determine how the different figures affect the loan EMIs.
Moreover, an individual can opt for a home loan balance transfer and save substantially on housing loan EMIs. This will facilitate a borrower in choosing a financial institution offering home loans within affordable terms and conditions. Additionally, some lenders also provide top-up loans with a sizeable fund if a borrower opts for a home loan balance transfer option.
What factors contribute to housing loan EMI?
The main factors contributing to home loan EMIs are:
- Lower principal amount
The loan amount that a borrower acquires from a financial institution is considered the principal. The principal is directly related to the monthly instalments.
- Different interest rates
This is the rate at which a financial institution offers a home loan to a borrower depending on factors like his/her credit score and loan amount. It varies from one lender to the other and is a significant aspect of an individual’s EMI.
- Longer loan tenure
Loan tenure is the period within which a borrower must repay his entire outstanding debt. It is inversely proportional to EMIs, which means the longer the loan tenure, the lower the EMIs will be and vice versa.
Adequate loan repayment planning and effective comparison between lenders are crucial aspects of loan management. Regarding the same, a home loan EMI calculator is a specialised tool that helps individuals plan their borrowings in advance.