Owning a home gives mental satisfaction and security that are somewhat indescribable. A major way to own a home is by taking a home loan. A home loan is easy to get if you have an impressive credit history. However, for a home loan to work out well without any hassles, you will need a home loan EMI (Equated Monthly Instalment) calculator. It is a great tool that helps you calculate and manage your finances when applying for a home loan.
In this article, you will learn what a home loan EMI calculator is, the benefits of using a home loan calculator, how to use a housing loan EMI calculator, and how to calculate a home loan amount using an EMI calculator. Keep reading.
What Is a Home Loan EMI?
A home loan EMI calculator is a financial tool that enables you to estimate the EMI amount that you need to pay monthly for your home loan. This tool also informs you about the estimated interest that you’ll end up paying for the entire home loan tenor. Following some simple steps, you will be able to calculate the home loan EMI inclusive of the interest as per the applicable rate.
What Is a Home Loan EMI?
EMI stands for Equated Monthly Instalment. EMI is the monthly payment that a home loan borrower agrees to pay throughout the home loan tenor. The EMI is a total of the fraction of the principal amount payable and the interest payable for a month.
What Is a Home Loan Amortization Schedule?
A home loan amortization schedule is a record/table that details all the periodic payments of your home loan. This is generated through an amortization calculator. Amortization refers to the procedure of repaying a loan through regular payments over a duration of time. It estimates the loan payment with the principal amount and rate of interest on every payment till the loan is paid back in full.
Benefits of Using an EMI Calculator for Home Loan
A home loan EMI calculator provides you with many benefits. Below are some of the benefits that will interest you.
1. Accurate Result
When a calculation is done manually, some miscalculations may occur without you realizing and this will produce incorrect results. But with a housing loan EMI calculator, you will not see incorrect results, all calculations are done with 100% accuracy.
2. Easy Calculation
Using a home loan EMI calculator is easy, you don't have to go through so much stress to calculate your EMI repayment amount. What you need is for you to enter the loan amount, rate of interest, loan tenor and processing fee (if available). The calculation will be done by the home loan calculator and the EMI amount will be provided by the EMI calculator.
3. Choosing the Right Tenor
A home loan EMI calculator will help you choose the right tenor for your home loan. You can decide whether you can afford to pay a high EMI and choose a short tenor period for paying back the loan fast, or you can pay a comfortable EMI and extend your loan period.
4. Good for Loan Management
If you want to review your finances and see how a prepayment will help for paying off the loan before a period ends, a house loan calculator will help you do that effortlessly.
5. Comparing Loan Offers
You can use a home loan EMI calculator for comparing the loan offers from different banks or financial institutions. It shows the total cost of the loan along with respective EMIs. This helps in narrowing down the best option for you and choosing the loan that suits your set of specific requisites.
How to Calculate EMI for Your Home Loan
Calculating the EMI amount of your home loan is easy. You just need to enter the amount you require, the tenor (in months, and not years), and the rate of interest in the required fields.
Stable and safe finances are always secured with good planning. Calculating and knowing your home loan EMI in advance lets you have a better understanding to plan the money you will have to spend every month.
You can do the long-term and short-term financial planning to pay the EMIs and manage the regular expenses.
The mathematical formula for calculating the home loan EMI is;
[P x R x (1 R)^N]/[(1 R)^N-1]
‘P’ represents the loan amount or principal
‘N’ is the number of monthly instalments
‘R’ is the interest rate per month.
Therefore, if the rate of interest per annum is 11%, then the value of ‘R’ will be 11/ (12 x 100).
How to Use a Home Loan EMI Calculator?
Input your principal loan amount, home loan interest rate, and loan tenor in their respective slots on the home loan EMI calculator. Alternatively, you can also use the sliders to adjust the figures, depending upon the type of calculator available on your lender’s website. Once you have successfully entered the three values, the calculator will automatically display the home loan EMI amount within seconds.
Also, you can keep changing and modifying the figures, and the calculator will show you instant and detailed results, thereby helping you customize your home loan based on your comfort.
Getting a home loan isn’t an arduous process if you know the exact things to do. Avail yourself of customised home loans online by using helpful tools that give you accurate and instant results. A number of lenders offer these tools free of cost, one such lender is Bajaj Finserv.
With Bajaj Finserv, you benefit from simply home loan eligibility criteria, an easy application process, minimum documentation, and low-interest rates starting 6.75%* p.a. Visit their website to use the home loan eligibility calculator and housing loan EMI calculator today, and with the right eligibility, you stand to avail of a home loan with EMIs as low as Rs.649/Lakh*.