Purchasing a home today is not easy with the price of real estate going through the roof. So, what option does a buyer in pursuit of a home for his family have? Well, you can apply for a home loan after doing thorough research on its pros and cons. Since home loans have long tenors and eventually impact the financial future of the borrower, it is advisable to plan wisely before getting into one. You should know all about the home loan EMI and the home loan tax benefits. So, let’s start with the very basics.
What is an EMI?
EMI or Equated Monthly Instalment, as the name suggests, is a monthly instalment paid to the bank or other financial institution every month for borrowing money from them at a said interest rate. An EMI consists mainly of two parts: interest on the loan and the principal amount to be repaid. The principal loan amount, together with the interest, is divided by the tenor or the number of months in which the loan must be repaid and this is used to calculate the monthly EMI. During the initial months, the interest portion of the EMI is greater and this gradually decreases with each payment. Over the tenor of the loan, the proportion of principal and interest components in the EMI changes. What this means is that you will pay more towards the principal and less in interest as the time advances.
For home loans, an online home loan EMI calculator can help you plan the best home loan with the minimum interest rates, keeping your future financial stability in mind. It can also help you compare interest rates with other lenders and if required, you can do a balance transfer of a home loan.
What Is an Online Home Loan EMI Calculator?
An online home loan EMI calculator is a self-help planning tool offered by most lending institutions which can help you calculate an approximate figure for the total monthly instalment payments or EMIs for the home loan. It helps you plan your finances before applying for a home loan, taking into account the current home loan interest rates being offered by the lenders and other factors.
How to Use an Online Home Loan EMI Calculator?
Using an online home loan EMI calculator is easy and simple. The calculator can help you calculate the approximate home loan EMI figure as well as help you plan your budget accordingly. You just need to enter the following to know the approximate monthly EMI:
- The principal loan amount you wish to avail (rupees)
- Loan term (months or years)
- Rate of interest (percentage)
Online Home Loan EMI Calculator Benefits
A Home Loan EMI calculator is an easy-to-use and effective online tool with the help of which you can effortlessly find out the home loan EMI (inclusive of loan interest) that you would need to pay each month to repay the loan. Here are some of the many benefits of using a home loan EMI calculator:
Easy to Use
Using a home loan EMI calculator is no rocket science and is very simple. All you need to do is enter the required loan amount, interest rate, processing fee (if applicable), and the loan tenor. You will receive an accurate answer within seconds which will help you decide and plan the home loan accordingly.
It Helps You Select the Right Tenor
Once you know the approximate loan EMI, you can change/decide on the right home loan tenor. Higher EMIs give a shorter loan period and allow you to quickly pay off your loan if you can afford to pay higher EMIs. Or else you can extend the loan period to what you are comfortable with and plan judiciously for a loan tenor which will not impose a financial burden on you.
Helps with Proper Loan Management
At times, you will have some extra funds while paying your EMIs. These funds can be used for the prepayment of the loan and you can use a home loan EMI calculator to see how your prepayments will impact your EMIs before the loan term ends. The home loan EMI calculator will also give you information on the impact of prepayment of home loans on your EMIs and how it could be beneficial for you.
Helps You Compare Loan Offers
Using the simple home loan EMI calculator tool, you can compare loan offerings and the different interest rates offered by various lenders. The home loan EMI calculator, thus, helps you calculate and know the total cost of each of the offered loans and the EMIs for the same. This will help you choose the most suitable option and help you decide on the loan amount and the tenor for the same. It will help in the proper calculation of the EMIs so that you can plan your financial future keeping in mind the loan EMIs that will need to be paid.
Buying a home can be a stressful process if there is a home loan involved. But with a home loan EMI calculator, you just need to enter your principal loan amount, interest rate, and tenor to get an approximate value of the payable EMIs within seconds. With an almost accurate EMI calculation, you can plan your budget in such a way that your other monthly expenses are not affected. The home loan EMI calculator, thus, proves to be an essential financial planning tool which helps you plan your finances better while opting for a home loan to buy the desired home for your family. It can help you get a clear picture of the loan amount required to be paid monthly among other expenses and how best to go about it without disturbing your budget too much.