A housing loan EMI calculator enables borrowers to schedule their monthly equated instalments for loan repayment purposes. This calculator uses a formula as given below for simple EMI calculation:
E = [P x R x (1+R)^N]/[(1+R)^N-1]
Where P= Principal outstanding; R= Monthly rate of interest; N= number of monthly instalments.
However, calculating manually using this formula is a tedious task considering the large sanction amount. Hence, financial institutions, including HFCs, let individuals use this online tool to plan their loan repayment schedules better.
To understand this, one must refer to the following example.
The procedure of making an EMI repayment schedule by using a housing loan calculator
Considering a loan amount of Rs.20 lakh at a fixed interest rate of 6.75%, one has to pay an EMI of Rs.39367 for a loan tenor of 5 years. Similarly, if the loan tenor is changed to 10 years, the monthly equated instalments will be Rs.29965. In this way, borrowers can change the loan repayment tenor in the housing loan EMI calculator and prepare a schedule for their convenience.
Further, it is evident from the above example that with the increase in loan tenor, the amount of EMI decreases. However, they must note that it increases the total interest outgo.
In addition, individuals also get an amortisation schedule of housing loan alongside this calculator. With the help of this table, borrowers can make timely repayments against their loan amount. This schedule also shows the principal and interest breakup until the entire amount is paid.
Thus, applicants must understand the working of a home loan EMI calculator to make a proper repayment schedule.
How to use a housing loan EMI calculator?
The home loan calculator feeds in the following information to fetch EMI details:
- The loan amount.
- Repayment tenor.
- Applicable interest rate.
This online tool will calculate housing loan EMI, total interest, and the total amount payable within a few minutes upon entering these values.
Once borrowers obtain their EMI amount, they can secure a housing loan from reputed financial institutions. Some lenders offer a high-quantum loan amount with a flexible tenor to potential homebuyers.
In addition, selected financial lenders also provide pre-approved offers for a seamless loan application process. These are available on various credit products, such as loans against property and home loans. Borrowers can check their pre-approved offers by submitting their names and contact numbers.
That said, this online tool helps borrowers streamline servicing this substantial amount with ease. Here are some benefits of calculating EMIs before taking a home loan by using this calculator.
Benefits of using housing loan EMI calculator
Home loan borrowers must manage their finances beforehand so that they do not miss out on paying monthly equated instalments. For that matter, they should utilise an EMI calculator for the following reasons:
- Easy calculation: An online calculator feeds information regarding a housing loan amount, interest rate, and tenor. Within minutes, it generates the EMI amount and total interest payable. One need not use complicated formulas to evaluate EMI manually. It also omits the chances of getting erroneous results.
- Choosing an appropriate tenor: After fetching the EMI value, borrowers can change the loan tenor to reach an affordable amount. In case potential buyers choose a short tenor, their EMI increases, whereas, for a longer loan tenor, the monthly equated instalments will decrease. Keeping this in mind, one can reach an appropriate loan tenor.
- Helps in loan management: This calculator enables an individual to prepare a repayment schedule. The potential buyer can check this table and know if he/she can access any extra funds for initiating prepayments. Therefore, borrowers can revisit their financials and make an informed decision.
- Comparing loan deals: Lenders across India offer a number of deals on a home loan. However, choosing a lender that offers the best deals can be a daunting task. Therefore, borrowers can streamline their options by comparing home loan interest rates on a home loan EMI calculator to ensure maximum benefits.
Therefore, it is evident that by using a housing loan EMI calculator, borrowers can obtain EMI details and plan out their finances accordingly. Further, with the EMI for different loan tenors, they can chalk out a repayment schedule and stick to it for convenience.