A Home Loan is considered a high-value loan as it can last up to two decades. The borrower is indebted until you repay the whole amount with interest. It would help if you consider your financial situation and affordability and check Home Loan eligibility before taking up this loan, as it is one of the most significant parts. Remember that a fixed income will go towards EMI payments for several years. You can take help from a Home Loan EMI calculator, which is available online. With this, you can understand the nature of your EMIs.
What is a Home Loan EMI Calculator?
An online tool that can assist you in computing the payable EMI amount against your Home Loan before applying for the said loan is known as a Home Loan EMI calculator.
How Does the EMI Calculator Work?
The calculator determines the payable EMI over a specific tenure at an interest rate that depends on the loan amount. You can easily find an EMI calculator on all lender websites. You can input different principal loan amounts, interest rates, and tenures to determine the payable EMIs.
The formula used by the Home Loan EMI calculator is-
EMI = [ P x R x (1+R)^N]/[(1+R)^N-1]
- P is the principal loan amount
- R is the rate of interest
- N is the repayment tenure
You can easily adjust the values by using the slider provided in the calculator. It can be easily moved from the left towards the right direction with the help of the mouse. For example, use the slider to select the loan amount, tenure, and interest rate. You can keep inputting different values while the calculator computes a correct EMI amount in less than a minute.
How Does an EMI Calculator Help While Applying for a Home Loan?
Once you have figured out how an EMI calculator works, you need to understand why it is vital for you to use this calculator before applying for a loan. Here are some benefits of using the Home Loan EMI calculator-
An Accurate Distribution Of Financial Charges
You can understand the financial costs associated with your Home Loan with the help of an EMI calculator. These charges include the
- Total payable interest
- Loan processing cost
- Stamp duty fee
- Foreclosure fees
You can get to know the loan’s actual value while subtracting its associated charges.
No Manual Calculations Needed
Calculation of EMIs is a complex task when done manually. The EMI calculator saves you the trouble of manual calculation and helps you get an accurate outcome in a matter of seconds. Humans are bound to make errors while calculating EMIs and remember that a tiny mistake can cost you a lot. While solving the equation manually, you’d have to go over it repeatedly to ensure that it is correct. The Home Loan EMI calculator allows you different input values and quickly produces a guaranteed correct result.
Can Compare Different Home Loan Rates
Every lender provides a different rate of interest on a loan amount. Even a slight interest rate difference can reduce the EMIs and the charges associated with the loan. The EMI calculator allows you to compare the numerous interest rates offered by different lenders seamlessly.
Help You With Your Finances
With an online EMI calculator, you can input different interest rates and tenure combinations. You can plan your budget keeping your result in mind as the calculator produces an exact EMI amount. It will help if you plan your finances so that your additional monthly expenses are not affected.
Help Manage Other Loans
Sometimes people pay EMIs for more than one loan simultaneously. When you add another loan to your existing list of loans, your financial situation will be affected. Therefore, you need the EMI calculator to consider your additional loans.
The EMI calculator is a beneficial tool. However, do not forget to check Home Loan eligibility before going forward with the application.
A Home Loan EMI calculator can be of great help to a borrower. Calculating the EMIs in advance enables you to create a budget and plan your potential expenses accordingly. In addition, it helps you plan repayments and prepayments. Therefore, it is suggested to use an EMI calculator before getting a loan.