Opting for a loan is an effective way to buy a home without redeeming your savings or investments. You can avail of lower interest rates and longer loan tenure that allows you to pay off your debt without any delays or defaults. However, before applying for a housing loan, you must assess your needs and choose a loan that you can afford to pay its EMIs.
Since the home loan amount is considerably high, you must repay it in equated monthly instalments (EMIs). It is imperative to figure out a suitable EMI for yourself before applying for a home loan. You can use an online home loan calculator to determine your EMI based on three factors – principal loan amount, interest rate, and loan tenure.
How to use a Home Loan Calculator?
Every lender has an online home loan EMI calculator available on their website. You can use it to determine your EMI affordability before applying for a housing loan. There are three main components of a home loan calculator – loan amount, interest rate, and loan tenure.
You will need to enter the loan amount you need, the interest rate, and the loan tenure figures upon the calculator available on your lender’s web portal. After entering these three values, the calculator will instantly produce a home loan EMI amount based on your needs. The best part about a home loan EMI calculator is that you can alter the values of these components until you figure out a suitable EMI. It is the best way to customize your home loan based on your affordability.
What are the Advantages of using a Home Loan Calculator?
It is imperative to use a home loan calculator before applying for a loan. It enables you to be well-informed and choose a home loan product that best serves your needs and preferences. Here are the benefits of using a home loan calculator:
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Easy calculation
Unlike a manual calculator, it offers the easiest and quickest way to calculate your EMI. All you need to do is enter the loan amount, interest rate, loan tenure, and processing fee (if required). You will get a result within seconds. The best part is that you can save time in calculating your home loan EMI. Anyone with access to the internet can use the EMI calculator from the comfort of their home.
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Choosing a suitable loan tenure
After securing a suitable and affordable EMI amount, you can work on choosing a loan tenure based on your affordability. You can choose to opt for either a high or short loan tenure. However, if you have the budget, it is advisable to get a shorter loan tenure, as you can get rid of the financial burden sooner.
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Assist in managing the home loan
During your home loan tenure, you may get a bonus or salary increment. That is a surplus amount that you can use to make home loan prepayments. Since there are no prepayment penalties on home loans, you can take this opportunity to reduce the financial burden on your monthly budget.
You can use your lender’s online home EMI calculator to check how prepayments can help you pay off your loan before the end of its term. But, you will need to check with your lender to know if they have such a facility first.
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Helps in comparing home loan offers
Home loan benefits and offers vary across lenders in India. Therefore, you will need to compare multiple lenders, and home loan offers before making a decision. A home loan calculator can help you compare home loan offers from different lenders. It enables you to find which lender offers the best interest rate, loan amount, and loan tenure. After making a comparison, you can choose a home loan that best suits your needs.
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Accurate results
While calculating your home loan EMIs, you are prone to making mistakes that produce incorrect results. Whereas, with an online home loan EMI calculator, you can produce the most accurate result with just a few clicks on your computer. You can calculate an affordable EMI with 100% accuracy within just a few seconds.
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Helps in validating information
You can use a home loan calculator to negotiate a housing deal with your preferred lender. For instance, you can verify your lender’s repayment schedule through the repayment table details in the online calculator. However, you must understand that the numbers differ from time to time. The reason is that lenders may add additional charges in your equated monthly instalments (EMI) calculation.
Final words
Taking a home loan to buy your dream house can be expensive, but you can reduce a significant financial burden by planning your budget with an online home loan calculator. Do note however, that most lenders show you a near exact estimate of your monthly EMI based solely on the loan amount, interest rate and tenure. Your actual monthly EMI may also contain other charges such as insurance, which cannot be predetermined using an EMI calculator.
