One of the costly affairs is to buy a house. To make it little easy there are several home loans available in the market. Home loan is a greatest way to acquire a home, not only it reduces stress of arranging finances in one go but also you can avail benefits attached to it. As a first time home loan buyer, you can avail tax benefits and if you are a women home loan buyer then you get extra concession. Most important aspect of home loan is EMI and eligibility criteria. Checking the eligibility criteria is easy, as it is readily available on every lenders website. To check the EMI to repay the loan, there is an home loan EMI calculator which helps you calculate repayment options without any hassle.
What is EMI Calculator?
EMI calculator is a powerful tool which works like a basic calculator and it helps in calculating the EMI, monthly interest and monthly reducing balance on the basis of principal amount, loan tenure and interest rate.
How to Use Home Loan EMI Calculator?
There are several home loan EMI calculators available online which are also easy to use. All the home loan EMI calculators give you accurate results just by providing few details. Here are steps which you will have to perform to calculate home loan EMI:-
- Fill the amount you wish to borrow
- Now, fill in the interest rate at which you are getting a home loan
- Lastly, fill the tenure time, in which you want to repay the loan
Once the above steps are finished, your EMI amount will be displayed.
How does Home Loan EMI Calculator work?
There is a mathematical formula to calculate:-
Home Loan EMI Calculation Formula:
EMI=[P x R x (1+R)^N]/[(1+R)^N-1]
In this formula,
EMI – Equated Monthly Instalment
P – Principal amount
R – Monthly rate of interest
N – Loan tenure, it should be in months
To get the monthly home loan rate, divide the annual rate by 12, as the interest rates are annual.
For example, if the applicable home loan rate of interest is 8.9%, your monthly interest would be 0.0074 (0.89/12 = 0.0074)
The tenor should be in months for which you should divide the number of years with 12. Let’s assume your tenor is for 10 years then loan months will be 120 months (10*12=120).
P= Rs 15,00,000
R= 8.9%
N= 120
EMI= Rs 18,920
Benefits of home loan EMI calculator
- Compare the EMIs
With so many available lenders available in the market, EMI calculators help compare the loans with each other and helps you understand which lender will be best according to your financial needs.
- Get the break ups
Home loan EMI calculator not only helps you estimate the EMI but it also gives you a break up of the related costs. In case the lender has not revealed any hidden charges then surely you can ask the lender for the same.
- Helps you decide the amount
The EMI calculator will help you decide how much amount you want to borrow. Once you get to know your EMI you can decide on the finances as well. It should be noted that higher loan amount means higher EMIs. It is advisable not to risk your financial well being on a home which you cannot afford.
- Choosing appropriate tenor
Once you have the estimated EMI, you can also adjust the tenor of your home loan. For example if your EMI is less then you can decrease the tenor and if your EMI is more than expected then you can increase the tenor, as EMI directly depends on rate of interest and tenor.
- Helps in managing prepayment
Home loan EMI calculator not only helps you manage EMI but it also helps in plan part pre payment or prepayment . The calculator calculates the EMI before and after the pre payment which helps us decide whether to make the prepayment or not.
- Financial planning
An EMI calculator for home credit empowers you to avoid future monetary issues. By realizing your lodging credit EMI ahead of time, you can design your spending all the more productively and obtain a sum that accommodates your bill.
