With the demand for housing loans set to grow by up to 19%, it is becoming one of the most preferred options to finance housing dreams all over India. While these loans give funds of high-value, lenders also offer ample time to repay through an extended repayment tenor.
As for borrowers, they also need proper financial planning to repay such a high amount. In that case, a home loan installment calculator can come to the rescue.
Also known as an EMI calculator, its use can help you plan your monthly outflows much before it becomes a burdening liability and stresses your finance. With this calculator, you may compute the home loan EMIs you will need to pay every month. It thus, helps you estimate the suitable loan amount you should avail so that the EMIs fall well within your budget. Now, let’s understand in detail about this calculator.
Why use a home loan installment calculator?
It is advisable that you use a home loan EMI calculator before availing the loan for several reasons.
It lets you know your fixed monthly obligation with accuracy
Several lenders bring you a housing loan EMI calculator with which you can calculate the EMIs quite precisely. Knowing the payable EMI before you apply for the loan makes it easy to plan your monthly inflow and outflow of finances.
Here, you need to input the loan amount you seek to avail, the tenor for which you want it and the applicable rate of interest. Then, the calculator computes the EMI based on these entries. The formula used for this calculation is given below.
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
Here, P stands for the principal amount, N for the total number of installments, and R for the interest rate calculated on a per month basis. Knowing your EMIs can also help you make an informed decision for the tenor and loan amount.
You can arrive at a suitable loan amount and tenor
While a loan amount is directly proportional to the EMI you need to pay, loan tenor is inversely related. It means an increase in this amount increases EMI while an increase in loan tenor reduces it.
With a home loan installment calculator, you can thus increase or decrease either of the two to arrive at a suitable EMI amount that prevents stressing the budget.
On the other hand, with a chosen loan amount if you feel a higher EMI is affordable, you can go for a higher loan amount.
You know the total interest payable on your housing loan
The EMI calculator also calculates the total amount and total interest payable along with the EMIs. Here, it is essential to understand that home loan interest rates are also affected by the tenor chosen; i.e., the longer the tenor, the more interest you end up paying and vice versa.
Hence, the total interest payable will help you make an informed financial decision.
Estimation of your eligibility to avail the loan becomes easy
By calculating the EMI amount, you will be able to estimate its suitability as per your repayment capacity.
If the amount is well within your capacity to repay, your home loan eligibility increases. You may thus proceed with the steps to easily get a home loan in India.
Besides, this calculator also provides a scope to choose the best lender as you may compare the EMIs as per varying interest rates available.
Thus, it is advisable that you use a housing loan calculator for better financial planning. With this calculation, now you can conveniently apply for a home loan to purchase your dream house.