How Home Loan EMI Calculator Helps in Purchasing a Home
With the focus on ‘Housing for All’, the Union Budget 2021 has extended the tax holiday for affordable housing projects by a year more. The budget also extends an additional interest deduction of Rs.1.5 lakh on home for first-time house-buyers till March 31, 2022. Adding this rebate to the already low home loan interest rate regime will boost demand for purchasing homes.
Since purchase of a home involves a lump sum monetary investment, first-time applicants must calculate their EMI amount before finalising any lender. Using the home loan calculator, applicants can find out the exact amount and plan their finance accordingly.
What is a home loan calculator?
A home loan calculator is a simple self-help planning tools that help borrowers calculate their exact EMI amounts paid every month towards home loan repayment. The calculator also provides information regarding such a loan’s total interest outgo. Some calculators present an amortisation schedule of loans as well, ensuring easier understanding.
Whether you are availing home loans in your 20s or at a later stage, financial planning using such tools is crucial for effective repayment. One must compare several non-banking financial companies to avail the best home loan scheme.
Additionally, one must look for housing finance companies that extend attractive pre-approved offers to streamline the home loan process. Such offers are also extended on several financial products like home loans, loan against property and more. You can check your pre-approved offer by submitting your full name and contact information.
How much EMI can you handle?
An equated monthly instalment (EMI) is the amount a borrower pays to the lender each month against the home loan borrowed. As a borrower for such long-term credit, one should know how much home loan EMI they can afford. The calculator is apt for this purpose.
How does a home loan calculator help in purchasing a home?
People are often unaware of the advantages of using a calculator for a home loan and paying EMI. Without proper market research, it is most likely to end up with the wrong home loan plan. Only after comparing several lenders applicants must settle with one.
- A home loan EMI calculator gives a clear understanding of the amount that is paid towards the home loan repayment.
- It helps customers make an informed decision regarding the cash flow.
- It gives a detailed break-up of the EMI amount; how much amount is used to repay the principal and the amount, which goes towards interest payment.
- The home loan EMI calculator helps to compare loan offers provided by different lenders.
- It also helps to choose the right tenor. A high or low EMI rate is dependent on the loan tenor.
How does a home loan calculator function?
A home loan calculator functions on three parameters, namely, loan amount, loan tenor and interest rate.
The formula: EMI= [P x R x (1+R) ^N]/ [(1+R) ^N-1], gives a precise EMI amount, where ‘P’ stands for your loan amount or principal; ‘R’ is the interest rate per month, and ‘N’ denoting the number of instalments in total.
What is a home loan eligibility calculator?
Home loan eligibility is the factor that determines the approval or rejection of home loan applications. An eligibility calculator for home loan indicates whether the applicant is eligible for the home loan, based on:
- The applicant’s age
- Monthly income
- Repayment capacity
- Credit history
- CIBIL score
- Loan tenor
- Other financial obligations
Investing in a home is a long-term financial goal, which requires the commitment to repay the loaned amount by the end of the tenor without any default. The home loan calculator helps to emphasise an applicant’s final position for home loan eligibility.