A home loan has made owning a home easier; however, a home loan is a huge financial responsibility. Non-repayment can have life-long and drastic effects on your finances and lifestyle. Therefore, it is essential that you choose the right home loan amount and repayment tenor to ensure the loan’s timely repayment without constraints on your finances. To this end, use an online home loan EMI calculator to accurately calculate your EMIs and choose the right loan amount and tenor that suit your repayment capabilities.
Read on to know more about how to use an online home loan EMI calculator and how it can help you choose the best home loan offers.
How is home loan EMI calculated?
Your home loan EMI is the amount you repay the lender every month till the end of the repayment tenor. Your home loan EMI is calculated by considering the following three factors.
- Loan amount or principal: This is the total amount of loan you borrow, and it directly affects your monthly repayments. The lower the principal, the lower is the EMI, and vice versa.
- Tenor of the loan: This is the duration allotted to the borrower to repay the loan amount, including the interest. The longer the repayment tenor, the lower is your EMI. However, your total interest owed increases with the tenor.
- Rate of interest: There are two types of home loan rates, floating and fixed. In fixed-rate, the interest rate of the loan remains constant throughout the tenor. On the other hand, when you choose a floating rate, the interest fluctuates as per changes in the base rate. Therefore, while your EMI amount remains the same in a fixed-rate home loan, it changes for a floating-rate home loan.
You can calculate your EMI using formula, but this is tedious and can result in errors. On the other hand, you can calculate your EMI using an online home loan EMI calculator in a hassle-free manner. Read on to know how to use an online home loan EMI calculator.
What is an EMI calculator, and how to use one?
Using an online home loan EMI calculator, you can easily calculate the EMI amount for varying loan amounts, tenors and interest rate in just a few seconds. All you need to do is enter these parameters or adjust the sliders, and the EMI calculator displays not only the EMI amount, but also the total loan amount and interest payable.
For instance, for a loan amount of Rs.50 lakh with a repayment tenor of 60 months at an 8.35% interest rate.
Your EMI per month: Rs.55,087
Total interest payable: Rs.29,32,472
Total loan amount payable: Rs.79,32,472 (principal + interest)
What are the advantages of using an online home loan EMI calculator?
A home loan EMI calculator has the following benefits apart from providing accurate results.
- Helps compare different home loan offers: Just by entering the details of home loan offers into an EMI calculator, you can easily compare EMIs and choose the best offer and lender.
- Aids in monthly financial planning: Using an EMI calculator, you can forecast your EMI instantly and accurately, which eases your monthly financial planning, helping you easily repay the loan.
- Readily available and easy to use: Similar to applying for a home loan online, you can easily find an online home loan EMI calculator on lender websites and use it with ease, doing as many calculations as you need to.
- Supports prepayment planning: Some online home loan EMI calculators also give you the amortisation schedule of your loan, which is a breakup of the EMIs into principal and interest components. This helps you plan your prepayment using your bonus or other surplus funds so you can become debt-free sooner.
As you can see, using a home loan EMI calculator will simplify your borrowing experience and help you make a well-informed financial decision. So, use an EMI calculator to choose a suitable lender, depending on the loan amount you need and your repayment capacity.