Home loans are a substantial and long-term financial commitment. Hence, advance planning is imperative to tackle this financial burden without any hiccups. In this regard, a home loan EMI calculator is an efficient tool that has made financial planning easy and hassle-free.
This online calculator considers factors like interest rate, loan amount and the repayment tenor to find the monthly instalment amount. Before moving on to the procedure to use it, or its advantages, one should learn how this online device works.
How does a home loan calculator work?
Although this is a digital tool, this calculator is entirely based on an algorithm that involves a mathematical formula to calculate the applicable EMIs on the borrowed amount. Other than EMI, this calculator also provides the amortisation schedule for the entire loan tenor.
Calculating EMIs manually can be cumbersome and provide erroneous results. Therefore, to calculate home loan EMI, borrowers can follow the mathematical formula mentioned below:
- EMI= [P x R x (1+R) ^ N] / [(1+R) ^ N-1
Here, P refers to the principal amount, R denotes interest rate, and N signifies repayment tenor in months. Since this is an online tool, it can be accessed anytime and anywhere.
How to use this calculator?
Knowing your EMIs beforehand before availing home loan will ensure easy repayment and avoid financial burden in the long run. Following is a step-by-step guide on how to use this calculator.
Step 1- Visit the website of this online calculator
Step 2- On the next page, select the loan amount you want to borrow, enter the applicable interest rate, and choose a suitable tenor. Further, individuals can adjust the slider and change the loan amount and tenor to arrive at a suitable EMI to avoid any financial burden.
Step 3- After submitting the details, click on the ‘Calculate’ option, and this online device will show the result instantly
An assistance from this calculator can be beneficial for new home loan borrowers when they apply for home loan as it instantly provides the total payable amount, overall interest outgo and the EMI.
Benefits of home loan EMI calculator
Here is how an online EMI calculator makes your financial planning easy by calculating home loan EMIs conveniently.
- Helps to choose the right amount and tenor
By using a home loan EMI calculator, individuals will have a fair idea about how much loan EMI they are eligible to afford. This will further allow them to ease out their repayment process and prevent EMI defaults.
Further, it helps in choosing a suitable tenor. An extended tenor will substantially reduce loan EMIs but increase the interest component and vice versa. Therefore, individuals must assess their repayment capacity by evaluating their income and expenses and select a tenor to make EMIs affordable.
- Provides accurate results
One cannot afford to go wrong with a number when planning a home loan. As already mentioned, a manual calculation can provide erroneous results. Therefore, this online calculator always offers fast and accurate results in seconds, which is always preferable.
- Helps in loan management
With EMIs, sometimes borrowers need to pay additional funds to prepay their debts. If a borrower wants to review their financial data and find out how much pre-payment will help them in repaying the loan before the stipulated time, this calculator can help them with the information.
- Comparing loan offers
By using this calculator, borrowers can compare loan offers extended by different financial institutions. This calculator will show the total loan cost along with the EMIs. This helps in choosing the best loan option for the borrowers and choose the loan that will suit their financial requirements.
Apart from knowing about this EMI calculator and how it helps in an individual’s financial planning, one needs to know about the eligibility criteria for home loan, which are essential determinants of sanctioning a loan amount.
Moreover, borrowers eligible for a home loan can also avail of pre-approved offers extended by reputed housing finance companies. These offers are available on a suite of unsecured and secured financial products such as loans against property, home loans, etc. One can check their pre-approved offer by submitting their essential credentials.
Thus, a home loan EMI calculator can make the housing loan application process simple and convenient. Borrowers must ensure conducting thorough research before availing a substantial credit like this to avoid any financial distress later.