A home loan helps you purchase a home by borrowing money from banks that you must pay back in instalments. These instalments are paid back monthly, which includes interest and principal amount, called Equal Monthy Installment (EMI). You can use a housing loan EMI calculator to know how much you must repay. It tells you how much money, interest, and the total amount you must pay back each month.
Some banks allow you to avail the home loan top-up, which is additional funds over and above your current loan amount. You can use the EMI calculator to find the repayment amount for these loans also.
What is a Home Loan Calculator?
A Home Loan Calculator is an online tool on any bank’s website that calculates your monthly payments for a home loan. It considers how much you can repay and aids in deciding on the best loan amount and repayment period. If your monthly payment is too high, you can opt for a reduced loan amount or increase the repayment period to lower the monthly payment. Note that some lenders may require you to submit a possession certificate before they will approve your loan. Choosing a more extended repayment period will make the loan more expensive due to the interest charged over a period.
Characteristic of a home loan calculator
A Home Loan Calculator is a tool that helps you calculate the amount of money you need to return to the bank at the end of each month. It also simplifies the financial charges and saves you the trouble of doing any calculations manually; doing calculations manually will not only consume your time, but you might miss out on any small detail and make a mistake.
How does it work?
The home loan calculator uses a formula to calculate the money you must pay monthly to repay the loan. The formula of the loan calculator is
EMI = [P x R x 1+R)N]/[(1+R)N-1]
Principal (P)- The amount you want to take as a loan.
Rate(R)- The rate of interest charged.
Loan Term (N) – The duration of the loan time period.
Benefits of Home Calculator
Easy to Use: The calculator will calculate quickly once you enter the loan amount, interest rate, and tenure.
Understand Finance Charges: The calculator helps you know the actual value of financial charges, like total interest payable and processing fee. Banks and financial institutions show it as a percentage of the loan amount.
Compare Loan Offers: You can choose the most suitable bank using the calculator to compare loan offers from different banks. It will show you the total cost of each 70 lakh home loan emi and their EMIs.
Loan Tenure: Using the EMI calculator, you can select the most suitable loan tenure. If you can afford a higher EMI, you can go for a shorter loan term; otherwise, you can pay a lower EMI and extend the period.
Validate Loan Information: When negotiating with a bank, you can validate the repayment schedule by using the calculator’s repayment table.
Manage your Loan: The home loan EMI calculator can help you see how prepayments can assist you in paying off the loan before the term is up if you have some extra funds to make prepayments while paying your EMIs.
Benefits of Home Calculator in Financial Planning
- Get results fast: An online EMI calculator is quicker and less prone to errors than manually calculating EMIs. The calculator produces results in seconds, allowing you to try combinations to find the best EMI.
- Plan your home loan journey: By entering your desired loan amount and tenor into the EMI calculator, you can determine your monthly EMIs and get a breakdown of your loan value. You’ll also see how much of your EMI goes towards interest and principal repayment and how this changes depending on the tenor.
- Plan repayments: Using a home loan calculator, you can see how it reflects your loan term if you want to pay off your loan early or even partly pay the loan amount.
- Find the best deal: EMI calculator also helps you to calculate the total cost of each loan offer, making it easy for you to decide which loan offer to choose.
Now that you have understood that a home loan EMI calculator can help you better manage your finances, use one to find a suitable loan deal that meets your credit requirements. It will become easier for us to take a well-informed calculated decision.