Understanding the Benefits of Using an Emi Calculator for Home Loans

While servicing a Home Loan is simple, the calculation of EMI and other payables is not. Even if you know the EMI formula and how to calculate it, doing it manually is a challenging task. Moreover, the chances of getting erroneous results are high. 

Keeping these things in mind, most lenders nowadays offer an EMI calculator for Home Loans. Besides saving time, this online tool makes life easier for borrowers and brings peace of mind!

Understand the Benefits of a Home Loan Emi Calculator

Following are some of the benefits of using a Home Loan EMI calculator: 

  • Helps get the best deals

Before applying for a Home Loan, comparing the interest rates different lenders offer is imperative. Servicing a Home Loan is a lengthy and expensive affair; therefore, as a borrower, you must shop around a bit before finalising a lender. 

Depending on the lender, type of property chosen, loan-to-value (LTV) ratio, and applicant’s eligibility, the Home Loan interest rate varies. Thus, to qualify for low-interest Home Loans, borrowers can use the Home Loan EMI calculator to compare the rates online. It helps in choosing the most competitive rates and sealing better deals. 

  • Asists in Choosing the Right Loan Amount

Home Loan LTV ranges up to 90%. For example, if the valuation of a property is Rs 50 lakh and a lender offers an LTV of 90%, an individual can get a Home Loan of up to Rs 45 lakh. However, borrowers need to remember that a higher principal sum means higher EMI outgo and higher interest rates. Thus, they should only borrow what they can repay comfortably without altering their budget. 

A Home Loan EMI calculator lets individuals decide the loan amount and clearly understand what they need to pay as interest, EMI, and so on. Note that individuals can reduce their loan amount by arranging bigger down payments. It will allow them to borrow less. 

  • Helps Pick the Loan Tenure 

One of the benefits of Home Loans is that it comes with extended tenure. But, one must remember that while a longer tenure reduces the EMI burden, it increases the borrowing cost. Hence, individuals should use a Home Loan EMI calculator to check how much they can save on interest payments by shortening their tenure by a few months or years. However, in that case, they also need to consider their financial capacity so that they can pay a substantial EMI without hampering other financial plans. 

  • Ensures Smooth Repayment

A loan repayment plan is as important as paying the EMIs on time. An EMI calculator for Home loans helps in repayment management to a great extent. Since this calculator lets you see your monthly instalments and other payables, you can chalk out a clear picture of how your finances will look until the loan is repaid. 

It also ensures you have enough funds to pay the EMIs on time without defaulting. Otherwise, a single missed EMI payment may attract hefty penalty fees. Using this tool saves you from these hassles. 

  • Prompt and Accurate Results

One of the best things about a Home Loan EMI calculator is that it saves time on complex manual calculations of monthly instalments and other components of a loan. Moreover, the results this calculator shows are accurate. Therefore, one can make financial planning without any worry. 

Most lenders allow borrowers to use this calculator without asking for personal information. Hence, it is completely safe to use. 

  • Prepares for Part Prepayment

Prepaying a loan partly in regular intervals is an excellent option to reduce the term of a loan. In this regard, individuals can use festival bonuses, incentives or any additional funds to partly repay the loan. 

A Home Loan EMI calculator ensures you can make timely part-prepayment and foreclose the loan before the tenure ends. Besides reducing the financial strain, part-prepayment also improves your credit score. However, before opting for such an option, you must consider the charges involved with part prepayment. 

  • Future Financial Planning

By now, it is clear that a Home Loan EMI calculator facilitates repayment and allows individuals to plan their finances to fulfil their other financial obligations. 

However, before signing a loan agreement, it is also essential to read the fine print carefully to avoid any discrepancies in the future. 

How to Use an EMI Calculator for Home Loans?

Using an EMI calculator for Home Loans is easy. Moreover, you can use it anytime, anywhere. It follows the fundamental formula of EMI calculation as mentioned below:

EMI = P x R x (1+R)^N / [(1+R)^N-1] 

Here, P means principal amount; R = rate of Home Loan interest; N = tenure in months. 

You need to follow the steps below to calculate your monthly instalments. 

  1. Go to the website of your preferred lender.
  2. Visit the loan section and choose Home Loan from the options. 
  3. Check out the ‘Tools’ section and click on ‘Home Loan EMI Calculator’.
  4. Now on the scale, adjust the loan amount, enter the loan tenure and put the Home Loan interest rate in respective places.
  5. You will instantly see the results just below the calculator.

On the screen, you can check your EMI payable, interest payable, principal and the total amount payable. Notably, you can adjust the loan amount and tenure multiple times to see your preferred combination. 

Remember that the amount breakup you get on a Home Loan EMI calculator is not all. You may have to pay additional charges from time to time that are not included on the EMI calculator. For instance, lenders levy processing fees, loan foreclosure fees, and Home Loan balance transfer fees, if opted. You can consider these while calculating the total cost of borrowing.

In conclusion, a Home Loan EMI calculator proves to be a great aid that lets borrowers plan their finances before committing to a long-term financing option like Home Loan. So, if you are planning to apply for a Home Loan, research and use the online EMI calculator before making a decision. 

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