A home loan is a substantial financial commitment. So, prospective borrowers must prepare to manage overall finances and repayment schedules in advance. It enables them to handle additional obligations better without disrupting their monthly liabilities.
Furthermore, the affordability of a home loan is determined by the interest payable. As a result, prospective borrowers should use an online home loan EMI calculator to estimate their borrowing costs and monthly payments.
What is a home loan EMI calculator?
A home loan EMI calculator helps to determine the monthly obligations for a specific principal amount, repayment tenor, and interest rate. Moreover, the calculator shows the amount payable with the specified tenor once users enter the necessary data.
Besides this, a home loan EMI calculator also helps to chalk out the following:
- Home loan affordability
- Total downpayment required
- Deciding between long-term and short-term loan
- Financial planning
How to calculate loan EMI using a calculator?
To calculate the EMI using a home loan calculator, users must follow the steps below:
Step 1: Enter the desired loan amount
This is the sum that a prospective borrower will borrow from a lending organisation. A lower principle amount will entail lower EMIs and vice versa.
Step 2: Provide a loan tenor
The repayment duration or tenor is the time a borrower can take to pay the borrowed funds back. A longer tenor will need lower EMIs to repay the entire amount. However, a longer tenor usually signals a higher interest outgo.
Step 3: Indicate the interest rate
This is the additional amount borrowers need to pay on their loan to avail credit. It should be noted that this rate directly affects the value of the payable EMIs.
After providing all the values, the calculator will automatically display the payable EMIs.
Benefits of using the housing loan EMI calculator
Some of the best home loan calculators have multiple benefits. A few of them are provided below:
- Provides amortisation schedule
This is undoubtedly one of the unique advantages of using a home loan EMI calculator. A prospective borrower will get a complete financial breakdown that helps them manage the loan.
- Provides accurate results
For the majority of potential borrowers, manually calculating mortgage interest rates may seem like a daunting task. So there is always a likelihood of inaccuracy. However, using an EMI calculator lessens this possibility and produces reliable results. Additionally, this will make it easier to calculate and manage money wisely.
- Saves time
By using a housing loan EMI calculator, borrowers can cut down on the extra time needed to calculate EMI manually. Additionally, this is accessible 24/7, and prospective borrowers can frequently utilise it to obtain results in a matter of seconds at any time.
- Improves financial management
Individuals who are aware of the EMI payable can choose the loan amount they can comfortably repay. This will lower their likelihood of defaulting on credit. Additionally, a person can determine how much EMI they can afford and also calculate the ideal time for prepayment of a home loan.
- Helps decide the tenor
If any individual is unsure about choosing a tenor, they can easily opt for an EMI calculator to decide. Also, there are more ways to shorten the term and EMI of a mortgage, and it can be estimated effectively by using this calculator.
- Helps individuals to compare loans
Potential borrowers can find the best housing loan in India by comparing offers from several lending institutions using a home loan calculator. They can enter the tenor and interest rate numbers from several loans offers and determine which option results in the lowest EMIs. As a result, they will be able to choose the loan that best suits their needs and financial situation.
It is important to note that people should always select a reputable lending organisation with the best loan offer after comparison. This will give them access to various promotional offers and ensure their financial security.
Hence, with a home loan EMI calculator, individuals can ensure timely repayment and help in financial management. It also assists them in selecting a tenor that fits their requirement, which helps maintain a healthy credit score.