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Building or buying a home is a dream come true. Since many Home Loan and mortgage options are available in the offline and online market, it is not difficult to get one and buy the house of your dreams.
Taking a Home Loan could be tedious, especially for first-time home buyers. They may have no clue about the loan amount, how much down payment should be made, the loan repayment tenure, and how to calculate monthly EMIs.
EMI or Equated Monthly Instalment is a convenient way to pay off the loan monthly. Normally the EMI comprises a portion of the principal amount and a part of the interest amount charged by the Home Loan provider. Depending on your monthly budget and affordability, the EMI should be fixed. Thus, figuring out the EMI amount before settling for the Home Loan is crucial.
Here we will discuss a very important financial tool. The Home Loan EMI calculator will help you assess all these factors and guide you to make concrete and meaningful calculations concerning your Home Loan.
What Is A Home Loan EMI Calculator?
A House Loan EMI calculator is a unique and powerful financial digital tool that helps calculate your loan monthly EMIs instantly. This method gives you an approximate measure of your EMIs. It allows you to try various permutations and combinations of important parameters you need to fill in the EMI calculator.
Besides assessing the monthly EMI, the calculator also helps you check the right loan amount and tenure, which can help you decide the best and most economical deal according to your monthly budget.
Parameters Of Home EMI Calculator
When using the house EMI calculator, you must enter the loan amount, loan tenure, and the interest rate other financial institutions offer. The result conveys the monthly EMI that you would need to pay, the payment schedule describing the entire loan term, and payment of the principal and interest amounts.
The Home Loan EMI calculator differs from the Home Loan amount eligibility calculator. The latter helps determine your eligibility for a loan, and the former helps estimate your monthly EMIs toward your Home Loan.
How Does The EMI Calculator Work?
The a house EMI calculator works in the below-given format:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
Where:
P: Principal amount or loan amount,
R: Interest rate monthly
N: Loan tenure in months
The EMI calculator only considers the EMI to be paid towards the principal amount borrowed and the interest charged by the Home Loan provider. When calculating the EMI, some calculators consider extra charges, fees, or taxes to be paid associated with a Home Loan, however, some may not.
Let us understand the working of an EMI calculator using an example:
So let’s assume Mr X wants a Home Loan of Rs 25 lakh for 20 years, and the rate of interest offered by the financial institution is 6.5%. If you enter all these figures in the House EMI calculator, it will immediately display the following:
EMI Amount: Rs 18,639 (approx.)
Loan Amount: Rs. 25,00,000
Interest Payable Amount: Rs 19,73,439 (approx.)
Total amount payable during the entire tenure of 20 years: Rs 44,73,439 (approx.)
Benefits Of Using The Home Loan EMI Calculator
There are several advantages of using the Home Loan EMI calculator. Some of them are:
1. You Can Manage Your Loan Effectively
Your EMI calculator allows you to apply various combinations of loan tenure and the amount and helps you manage your loan effectively.
If your EMI is too high, you can increase the tenure or the down payment amount so that your loan amount gets reduced. You can make several changes to get to the desired loan EMI amount you can conveniently pay monthly.
2. Comparing Different Loan Offers
Every Home Loan provider provides loans with different interest rates and loan amounts. Using the Home Loan EMI calculator, you can easily compare and assess which financial institution is most affordable and suits your requirements.
However, you must remember EMI and interest rate are not the only parameters you must consider before choosing your Home Loan provider. You must also check the brand credibility, customer reviews, consumer support, and your relationship with the organisation.
3. Get A Break-Up Of Charges And Repayment Schedule
House EMI calculator helps identify the monthly EMI you need to pay, the principal amount, and the interest you would be paying across the tenure. It will provide you with an amortisation schedule, which carries details of monthly instalments for all the months of the loan tenure.
4. Easy, Convenient, Quick, Secure, And Free
If you calculate your EMI manually, you can probably make mathematical errors as the formula is complex. However, using the EMI calculator can save time, effort, and money. It is fast, safe and secure, user-friendly, and cost-free. You simply need to punch the right figures into the calculator, which will provide all the required details. Consider these details carefully and find the best Home Loan for your financial needs.
If you have the arrangement of finances and would like to prepay your Home Loan, you can again use the EMI calculator. It will analyse the difference in EMI before and after you prepay. It also helps you ascertain how your pre-payment value affects your Home Loan.
6. Helps You Assess The Down Payment Amount
If you make a small down payment, the loan amount eventually increases, leading to a higher EMI. On using the EMI calculator, if you feel that the EMI falls beyond your monthly budget, you can easily increase the down payment amount and reduce the Home Loan amount so that it automatically reduces your monthly EMI towards your loan.
EMI calculator is an effective digital tool that can help you assess, modify, and finalise your Home Loan conditions. You can use this free tool multiple times with different variations of the Home Loan amount and its tenure to come up with the right EMI amount that you can easily afford, which fits your budget perfectly.
