Buying a house is a significant financial decision for most people in India, and often, the biggest purchase of their life. To make this dream come true, many people opt for a home loan. However, taking a home loan comes with a long-term commitment to repay the borrowed amount along with interest. In this Home Loan buying guide, we will discuss the five benefits of using a home loan EMI calculator and how it works:
Home Loan EMI Calculator – What is it?
A Home Loan EMI (Equated Monthly Installment) Calculator is an outstanding online tool that assists you to calculate your monthly repayment amount for a home loan. It takes into consideration several parameters such as the loan amount, interest rate, and loan tenure, and calculates the EMI that you need to pay every month. To make this process more manageable and hassle-free, you can use a housing loan EMI calculator. The EMI consists of two components: the principal amount and the interest amount. The EMI remains fixed throughout the loan tenure, but the proportion of principal and interest changes over time, with more of the EMI going towards the principal repayment in later years.
Home Loan Interest Rate Calculator
A home loan interest rate calculator is another outstanding tool that helps you calculate the interest rate on your home loan. This calculator considers the loan amount, loan tenure, and the EMI you pay every month. It helps you calculate the interest rate that you would be paying on the borrowed amount over the entire loan tenure.
Home Loan EMI Calculator Benefits
Using a home loan EMI calculator has many benefits for borrowers. Some of the most significant benefits are discussed below:
Helps You Plan Your Budget
By using a home loan EMI calculator, you can know exactly how much you need to pay each month towards your home loan. This helps you plan your budget and manage your finances better. You can adjust the loan amount, interest rate, and tenure to see how it affects the EMI, and choose the option that suits your repayment capacity. This helps you in making an informed decision about your home loan.
Saves Time and Effort
Calculating the EMI manually can be a tedious and error-prone task, especially if you are not good at math. With a home loan EMI calculator, you can get accurate results instantly without any hassle. You can also save your calculations and compare different loan options side-by-side to make an informed decision.
Provides Transparency and Clarity
A home loan EMI calculator gives you a clear picture of the total cost of the loan, including the interest component. You can see the amortization schedule, which shows how much of the EMI goes towards the principal and interest each month, and how the loan balance decreases over time. This helps you to properly understand the impact of various parameters on your loan repayment and avoid any unwanted surprises later. The transparency provided by a home loan EMI calculator helps borrowers make informed decisions.
Facilitates Loan Planning and Prepayment
By using a home loan EMI calculator, you can plan your loan repayment strategy and decide if you want to pre-pay the loan to reduce the interest burden. This helps you make an informed decision about choosing the best lender for your home finance. You can see how prepayments affect the EMI and the loan tenure, and choose the option that saves you the most money. Some lenders also offer prepayment calculators that show the exact amount you need to pay to reduce the loan tenure or EMI. Home loan EMI calculators help borrowers save money by making informed decisions about prepayment.
Helps You Compare Loan Offers
One of the most significant benefits of using a home loan EMI calculator is that it helps you compare different loan offers from different lenders. You can input the loan amount, interest rate, and tenure for different lenders to see how the EMI and total cost of the loan vary.
How to Use a Home Loan EMI Calculator?
Using a home loan EMI calculator is easy and straightforward. Here are the steps:
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Go to the website of a lender or a third-party financial portal that offers a home loan calculator.
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Enter the loan amount you want to borrow. This should be the total cost of the property minus your down payment.
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Enter the interest rate offered by the lender. This can vary depending on the loan type, tenure, and (your) credit score.
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Enter the loan tenure in months or years. This is the time period over which you will repay the loan.
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Click on the “Calculate” or “Check EMI” button to see the EMI amount and the total cost of the loan.
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You can also see the amortization schedule and make adjustments to the loan amount, interest rate, and tenure to see how it affects the EMI.
Conclusion
To sum it up, a home loan EMI calculator is an essential tool for anyone planning to buy a house. It helps you plan your budget, saves time and effort, provides transparency and clarity, facilitates loan planning and prepayment, and helps you compare loan offers from different lenders. By relying on a home loan EMI calculator, you can make an informed decision about your home loan and save money in the long run. Therefore, it is highly recommended that you use a home loan EMI calculator when planning to buy a house, as it is a valuable asset in managing your finances and achieving your dream of owning a home.
