Discover How to Use a Home Loan Eligibility Calculator
Building a new house or buying one is a big deal and must be an informed decision. Applying for a home loan is preferable, but it often requires proper planning, knowledge of the dos and don’ts, and paperwork. You should also use a home loan interest rate calculator to find out how much interest you will be charged.
But don’t worry; all you have to do is read this article to learn about home loans, eligibility criteria, and how to calculate them.
In this article, you are going to learn about a home loan, the eligibility you should have to apply for it, and how to use a home loan eligibility calculator.
What really is a home loan?
A home loan, as the name implies, is financial help you take from a bank to purchase, extend, or renovate your house with the promise of returning the money with some extra returns. It has a fixed interest rate, which you will be charged when you take the money from the bank.
However, this house or property for which you have taken the loan remains a mortgage, which means the bank can take it away from you if you fail to repay the money.
A home loan is a very profitable option for people who have been dreaming of buying their own house. But, with all that said, you need a home loan interest calculator to help you manage your interest rates and EMIs (equitable monthly instalments).
What are the benefits of a home loan?
A home loan has a lot of benefits:
- Helps in reducing taxes:
To encourage more and more people to buy their own house, banks provide a tax reduction on the principal amount and the interest rate.
- Easily payable:
Banks often charge low EMIs if you take out a home loan. The amount won’t hurt you, and you can easily repay your loan. In case you feel like tracking down your interests, you can use a home loan interest calculator to keep track of the exact numbers.
- Saves you from paying rent:
Living in a rented house sometimes gets tough, and paying high rent every month is not easy. A home loan helps you build your own home and saves you from rent.
- The repayment period is long:
Often, the repayment period is long and manageable at the same time. So you don’t have to worry about paying a large amount at a time. You can gradually pay off your debts without compromising your expenses.
- No prepayment penalties:
If you pay the installments ahead of time, you will not be charged any additional fees. If you have extra money and are worried about spending it, you can pay it in installments.
Besides these, home loans are safe and secure, and you don’t have to worry about any risks.
What is the minimum eligibility to apply for a home loan?
There aren’t any exact numbers, but the values given below for age group, salary, etc. are nearly common.
- Age limit:
If you are a salaried individual, you must be at least 21 years old and less than 65 years old to apply for a home loan. This might be slightly different for self-employed people, but it is mostly the same.
- Minimum Salary:
If you are a salaried individual, your monthly salary should be at least 10 thousand rupees per month to qualify for a home loan. If you are a business person, you should at least generate 2 lakh rupees per annum to apply for a home loan.
- Loan term:
The maximum loan term is around 30 years, which means that if you apply for a home loan in 2022, the term lasts until 2052.
- Credit history:
Though not always requested, a good credit history is always a plus if you are looking for a home loan.
What is a home loan eligibility calculator?
A home loan eligibility calculator is a simple, user-friendly online tool that helps you estimate your EMI from your borrowed loan.
A home loan calculator calculates the interest you will pay to the bank in return for the debt. The interest is determined by your age, credit history, financial status, etc.
How do I use a home loan interest calculator?
Using a home loan calculator to determine your estimated EMI is simple. Here are some steps:
- Put your monthly income in the bar, and if you are an NRI, then you have to put your yearly income in the bar.
- Next, put the loan time period in the second bar of the home loan interest calculator.
- Now, enter the interest rate on the home loan that the bank has charged you. Different banks charge different rates, and this varies in almost every case.
- If you have other loans, put their EMIs in the last bar of the home loan eligibility calculator. This is an optional case. You can leave the space blank if you don't have a previous loan.
- Now click on “CALCULATE,” and your interest amount will appear on your screen.
Summing-up
A home loan calculator is of great use to estimate your interest, and you should use it quite often to map your current loan status. To keep yourself updated from time to time, you should use a home loan interest calculator. Since the risk is almost nil and the installments are low, a home loan is preferable to get your dream house.