Top Benefits Of Using Home Loan Emi Calculator For Your Home Loan Application
A home loan makes your dream of owning your own home more achievable. Thanks to digitisation, applying for a loan is not a hassle anymore. You can apply online and fund your dreams with minimal effort.
One of the prerequisites that can make loan approvals straightforward is the credit score. Typically, a credit score of 750 is crucial. Besides the credit score, another vital consideration is the EMI burden. Different banks charge different interest rates on home loans. The lower the rate, the lesser the loan repayment burden.
However, the interest rate is not the only factor impacting EMIs. Things like your age, loan term, and income also play a crucial role. So, how do you calculate EMIs and understand your loan burden clearly?
A housing loan EMI calculator can come to the rescue, helping you better plan your finances.
This article will take you through a home loan EMI calculator and decode various related aspects. So, read on!
What is a home loan EMI calculator?
The online platforms/websites of many financial institutions allow users to calculate EMIs based on the loan amount, tenure, and interest rates. This calculation is necessary as it helps you build a financial roadmap for the future.
Before we dive in, let us look at the components of EMI.
EMI = Principal Amount + Interest.
Here’s the formula for calculating Home Loan EMIs:
P x R x (1+R)^N / [(1+R)^N-1]
Here,
P = Principal loan amount
N = Loan tenure in months
R = Monthly interest rate, i.e., Annual Interest Rate/12/100
Suppose you are applying for a home loan of Rs 20,00,000 for a tenure of 240 months (20 years), and the annual interest rate is 8.4%.
Now, the annual interest rate is 8.4%. R = 8.4/12/100 = 0.007
Then, here’s how you calculate your EMI:
20,00,000 x 0.007 x (1 + 0.007)240/[(1 + 0.007)240-1] = Rs 17,230.
Now, if mathematics is not your stronghold, the above calculation may perplex you. Hence, in comes the home EMI calculator.
Let’s explore its benefits in detail.
Benefits of Using a Home Loan EMI Calculator
Your dream home can become a reality when you use the best tools to calculate, plan, and manage your cashflows. Let us now explore how a home loan EMI calculator can simplify our lives:
Calculate EMIs
Most lenders provide a home loan EMI calculator to allow you to figure out how much you will pay in monthly instalments. Not only that but the calculator can also be accessed via smartphone.
Avoid complex calculations.
Calculating EMI manually may not be everyone’s cup of tea. Most people hit a bump or get inaccurate results if they try manually. Hence, use a dedicated tool to compute the monthly repayment based on your desired loan amount, tenure, and interest rate.
Why waste your precious time when you can get results within seconds by entering the values?
Get a complete repayment structure.
Based on your entries, the housing loan EMI calculator will provide a complete breakdown of your loan repayment plan. You will get an amortisation table for the complete loan tenure, offering insights into the EMIs. Besides this, the table will lay out the principal and interest components that make up the EMIs. Hence, you can leverage interest savings and extract maximum value from repayments.
Plan Better
You may meet the eligibility requirements for a home loan, but the EMIs should not put a strain on your finances. With a home loan EMI calculator, you can figure out and plan your future by setting aside recurring cashflows in advance. In this way, you can manage your expenditure more efficiently.
Check & Compare
When out looking for home loans, everyone wants to come home with the best deal. An online home loan EMI calculator could prove immensely beneficial here.
You can use the calculator to understand which interest rate works best for you.
Make the decision.
Based on the home EMI calculator results, you can decide if you want to go for a short or extended tenure. Note that the shorter duration will have high EMIs, but the overall interest rate will be lower. If you believe your cash flow will not allow you to pay higher instalments, you can choose a longer term. However, in this case, the overall interest rate will increase.
Final Thoughts
Owning a house is a milestone in people’s lives. Most people save money to invest in property and/or build a home. Housing loans have become indispensable, powering hundreds of millions of households around the world.
However, before applying for a loan, you must understand your expenses and plan accordingly. The home loan EMI calculator is an excellent tool in this regard. It will estimate the monthly instalments and provide an end-to-end repayment chart.
Do you want to calculate your EMIs directly? Visit Piramal and try the free home loan EMI calculator today!