Borrowers often commit the mistake of availing loans without checking the exact liability they would be under when repaying this debt. EMI calculation is simple and does not take up much of your time. Learning more about how equated monthly instalments are determined should help you make informed decisions.
If you feel that manually calculating your EMIs may lead to errors or inaccuracies, you can also opt to use a home loan EMI calculator. Such a tool is available online and should be crucial when deciding the best housing loan option in the market.
What is a home loan EMI calculator?
It is an online tool that helps borrowers to understand the EMI they have to pay against the amount they are hoping to borrow. This calculator works on 3 basic components, principal, interest and tenor.
Principal: It is the amount that an individual desires to borrow. However, individuals should consider the down-payment amount before inserting the principal. For example, a property that costs Rs.50 lakh and the borrower can afford to pay 10% of it as down-payment, then his/her loan amount will be Rs.45 lakh and EMI will be calculated on this amount.
Interest rate: Home loan interest rates differ from one lender to another. Thus, before calculating EMI, individuals should be aware of the interest rate his/her desired lender is offering.
Tenor: Tenor is the amount of time a lender allows borrowers to repay their loans. Since home loans consist of a considerable amount, the tenor usually lasts for 15-20 years.
Inserting these details specifically into a housing loan EMI calculator will render an exact figure that a borrower has to pay for his/her home loan. These calculators are available for free on the website of any lender.
Benefits of utilising an EMI calculator for home loans
Using this home loan EMI calculator has several advantages, these are:
This calculator portrays an accurate break-up of the entire loan amount and other financial charges associated with it. Typically, charges like stamp duty, loan processing fee etc. are often included in the loan amount. However, with this calculator, individuals can get a better understanding of the sum they have to pay.
With the help of this calculator, borrowers can compare lenders and understand each plan in detail to make an informed decision. Check whether the financial institution you pick offers the most-suitable form of housing credit. Other than the interest rate, you must also consider other facilities, including pre-payment charges, foreclosure charges and more.
Using it saves the trouble of calculating EMIs manually. Any mistake in calculation can put borrowers in a sticky position while negotiating their loan.
Last but not least, this home loan EMI calculator helps borrowers in their financial planning.
Calculating EMI is only half the job done. To avail a home loan successfully, borrowers have to fulfil specific eligibility criteria set by different lenders. These home loan eligibility criteria determine whether a borrower can avail a loan or not. These are:
Age of the applicant.
Apart from these general criteria, reputed HFCs may have separate criteria for salaried individuals and self-employed individuals. Generally, the loan amount, age of the applicant and their service period requirements are different for salaried personnel and self-employed personnel.
Home loans are high-value loans and keep borrowers indebted until it is repaid. Thus, the calculation of EMIs related to the loan is a vital part of the process. Taking help of a home loan EMI calculator for calculating EMIs before taking home loans can assist borrowers in making an informed decision.