A home loan is a credit convenience aimed at helping home buyers purchase their dream property. Through this facility, the bank or finance company extends a specific amount of capital to the borrower, subject to certain terms and conditions. The borrowed amount is then paid back to the lender along with interest, in the form of monthly instalments or EMIs, over a pre-defined duration. To understand the financial implications of a home loan realistically, borrowers can compute their housing loan EMIs with the help of a home loan EMI calculator.
It is a handy tool, readily available on the websites of most lenders, for free. It enables you to forecast the estimated monthly EMIs and balance your budget accordingly. Thereby, one can gauge the feasibility of taking up a housing loan and further, customise it as per preference by adjusting the loan principal and tenor, to arrive at the appropriate EMI outgo.
Why Should You Use a Housing Loan EMI Calculator
A home loan EMI calculator is an extremely beneficial tool that comes with the following advantages:
Quick and Error-Free Results
Housing loans comprise large sums of money, and the calculations centred around them could get complex and liable to mistakes. Additionally, they might take up plenty of time and effort. Hence, in such instances, it is advisable to use an online EMI calculator to get quick and accurate results.
Plan Your Home Loan Repayments
One of the biggest benefits of a housing loan EMI calculator is that it helps individuals plan their loan repayments for the entire term. It requires just three fundamental inputs concerning one’s home loan – the loan amount, rate of interest and loan tenor. Based on these details, the calculator will compute the monthly EMIs in seconds.
Borrowers could even try various combinations of these three variables as desired, until they arrive at suitable home loan figures. Knowing the monthly instalments well in advance allows you to decide on the right time to avail of a home loan, factoring in your current and future cash flows.
Online calculators also provide a detailed break-up of the home loan. This tells you exactly what percentage of the EMI goes towards the principal repayment, as well as the proportion that will comprise your interest payment; and how it can change based on the loan tenor. Thus, the calculator helps to ensure that you borrow only what you can comfortably pay back.
Schedule Home Loan Pre-Payments and Foreclosure
As a housing loan borrower, the longer your loan tenor lasts, higher will be the interest outgo on your loan. If you wish to be debt-free before the stipulated completion of your home loan, you can opt for pre-payments. While servicing a home loan, whenever you have surplus funds, you can utilise them to reduce the outstanding principal amount and close the loan sooner. Using a home loan calculator helps you to understand how home loan pre-payments, fully or partially, can impact the overall loan.
Compare and Choose Home Loan Deals
When one plans to avail a home loan, it is always better to look up different lenders to see what kind of deals they may offer. Thereafter, you can compare these loan offerings by using an EMI calculator. It will display the total cost of each loan plan as well as the associated payable EMIs. Such a comparative ready reckoner will enable you to make informed choices; and select the most appropriate home loan and the ideal lender.
Benefits of Making Pre-Payments on Your Home Loans
Although, an online loan calculator provides a detailed overview of your home loan repayment plan, making pre-payments will alter this schedule. Bear in mind, there is usually no restriction on the number of part pre-payments one can make. Each part pre-payment goes towards covering the total outstanding home loan amount, subsequently reducing one’s principal sum. Following these payments, the net payable interest decreases as well.
Before planning their pre-payments, borrowers can use an online home loan pre-payment calculator to understand how it affects their loan EMI and tenor, along with the projected savings therein.
How to Calculate Home Loan EMI Online
Home loan EMI calculators are very easy to use and one can follow these simple steps to effectively access them:
- Go to the website of your preferred lender. Navigate to the home loan EMI calculator.
- Depending on the type of calculator provided by the lender, you can use the sliders to adjust the desired loan amount, your preferred tenor and the rate of interest as fixed by the lender. Or you can also fill in the three loan components in their respective fields.Â
- Once you enter the relevant information, click on ‘Calculate’. The online calculator will instantly display your loan EMIs, the total interest payable through the entire loan tenor and the total amount owed to the lender.Â
Summing Up
The EMI worked out through an online calculator is based on borrower inputs. But when you approach a lender for availing home loans, there may be variations in the loan amount, tenor, interest rate or processing fees. If the lender does not approve the loan amount for the tenor and interest rate previously used for the online calculation, in that case, the actual payable instalments will differ from the estimated EMIs computed by the loan calculator.
