Financing your home is simple if you take a home loan. However, a home loan is a long-term commitment, so you need to evaluate all your options before deciding on a loan scheme that suits your needs.
Advantages of Using the Home Loan Calculator
A home loan calculator is the best way to compare the different loan schemes in the market. When you undertake a financial commitment the size of a home loan, knowing beforehand how much you will have to pay back is always helpful.
Below are some tips for using an EMI calculator for a home loan to get an idea of what your loan repayment will look like.
Using a loan calculator can make it easy to compute loan amounts, interest rates, and resulting EMIs with ease. You can enter different combinations of loan amounts and tenures to see your instalment for each in just a few simple steps.
If you try to calculate the same using pen and paper, it might take hours to get the same calculations. These calculators are fairly easy to use: you need to enter the loan amount, the interest rate offered in the scheme, and the loan tenure.
Using the loan calculator, you can get a fairly accurate estimate of the EMI you will have to pay. Manual calculations have room for error, but the loan calculator will give you correct and instant calculations within minutes.
You can even get a break up of the loan repayment, showing you how much you will pay towards loan repayment and how much of the instalments will be the interest on your loan.
A home loan calculator can help you manage your finances better. House loans take a lot of time and investment. Thus you need to evaluate your financial situation, monthly budget, and other debts before selecting your loan.
Some calculators give you the option of entering your current loans or liabilities in the loan calculation to get a better idea of how much instalment amount you will have to pay with your existing debt.
Compare Loan Schemes
You can enter different loan amounts in the calculator to compare loan schemes. Different lenders offer different interest rates on a home loan, and even the loan tenure differs from scheme to scheme.
Even a mere 0.05% difference in the loan interest rates can significantly affect the EMI amount.
Using the calculator, you can get a good idea of the EMI payments on your loan. You can plan your monthly budget around the loan repayments even before applying for a loan.
Once you enter the amount of loan you want to borrow, you can adjust the tenure until you get an EMI amount you can comfortably repay. This can help you plan the loan repayment better.
Many house loan schemes allow you to prepay the loan before its maturity with just a minimal fee. If you want to buy a house but don’t have the necessary finance, you can take a home loan and repay it as soon as you get surplus funds.
How to Use the EMI Calculator for Home Loan
Here’s how you can use the home loan calculator to get your estimate EMIs.
The formula for calculating EMI:
[P x R x (1+R) ^N]/[(1+R) ^N-1]
- P is the principal, which is the actual amount of your loan
- R is the rate of interest set by the bank
- N is the number of years for which you take the loan
Lenders offer many other services when you take a home loan, such as customized repayment facilities. Try to take your loan from a lender you have a previous relationship with. This helps you get more add-on services with your loan.