Any loan taken without proper financial planning can become a major headache. Since home loan tenors are long, it is advisable to do your research and plan well beforehand before applying for a home loan in India. With the current home loan interest rates within the reach of common people, this sector is experiencing major growth. If you are planning to avail of a home loan, we recommend using a home loan EMI calculator to get an understanding of the EMI amount you can easily afford. These calculators are easily available online and are also free to use. One can easily find them on any aggregator website.
How Does a Home Loan Calculator Help?
A home loan calculator helps you plan your budget if you are thinking of availing of a home loan. The home loan EMI is calculated based on the amount borrowed, the loan repayment tenor, and the rate of interest. The interest rate charged by lenders and the tenor of the loan depends to a certain extent on your credit score and your monthly income. Thus, we can say that your home loan eligibility is determined by a few important factors like your age, income, and your credit/CIBIL score. A home loan calculator helps borrowers in the following ways.
Give an Estimated EMI
The home loan calculator’s main function is to provide borrowers with an estimated EMI amount for the loan amount borrowed, the rate of interest offered by the lender, and the loan tenor. This calculation can help one plan their monthly finances keeping aside the fund for the EMI and finding out how savings can be made from the same so that they can be used for Home loan foreclosure or investment.
Helps to Choose the Right Interest Type
Lenders provide loan applicants with 2 types of interest rates namely, floating, and fixed interests. The floating interest rates change or vary with the market but are cheaper. On the other hand, fixed interest rates remain fixed as mentioned in the loan agreement. Using the home loan calculator tool, you can select the best interest type for you so that the funds saved can be used for other financial needs and loan foreclosure.
Read Also: Differences Between Fixed and Floating Interest Rates
Choose the Right Tenor
A borrower can use the home loan calculator to calculate the monthly EMI for a loan tenor. One can adjust the loan tenor using this tool to find the best EMI amount which they can pay comfortably. If the borrower thinks they will need more funds than what the calculation shows, then the loan tenor can be extended so that interest rates are lesser and funds can be saved to keep the budget on track. A home loan calculator can thus help you zero in on the right loan tenor to save the maximum amount of money.
Make Right Financial Decisions
Managing the monthly budget while repaying a loan can be difficult and frustrating. The budget helps to determine where your money is going. The housing loan calculator helps to calculate the loan EMI and helps in budgeting, showing where exactly your money is being spent. Knowing an approximate monthly home loan EMI helps in planning the monthly budget. It helps to plan your finances and helps you make right decisions regarding what you can do to stay on track with respect to your financial habits.
Check Home Loan Eligibility and Compare
The home loan calculator tool can help to compare the interest rates and offers by various home loan lenders and check if you meet your chosen lender’s home loan eligibility criteria. This knowledge helps you to choose the best home loan option for you so that you can save up on the loan EMI amount and use this fund for investment or loan foreclosure in the future.
Go for a Home Loan Balance Transfer
Even a small amount saved on interest can be of great relief for a borrower. A home loan calculator can help you compare interest rates offered by different lenders and decide whether a balance transfer of loan would be feasible or not. In balance transfer, a home loan can be transferred from one bank to another offering home loans at lesser interest rates. It allows anyone with an existing home loan in one bank to transfer the remaining amount to another lender offering more favourable terms (lower interest rates).
Summing Up
Buying a home and paying EMI for it can be a long and stressful process if there is a home loan involved. However, using a home loan calculator, you just need to enter the required loan amount, interest rate and tenor to get an approximate value of the EMIs to be paid within seconds. With an almost accurate EMI calculation, you can easily plan your budget smoothly.