A housing loan is one of the easiest ways to arrange the money needed for the purchase of a home. However, settlement of a home loan is an expensive and long affair and a major chunk of a borrower’s salary goes into the repayment of a housing loan in the form of EMIs. Housing loan eligibility is an important measure for gauging your home loan affordability. Factors, such as monthly income, fixed monthly financial obligations, borrower’s current age, retirement age, and others, affect a person’s housing loan eligibility.
All in all, a home loan is a crucial financial decision for any individual. Therefore, adequate measures must be taken to manage finances ahead while planning to avail of a home loan. In this regard, a housing loan EMI calculator serves as a helpful tool to aid in financial planning, such as assessing payable EMIs, finding suitable loan tenor and interest rates, and evaluating affordable loan amounts.
What is a Home Loan EMI Calculator?
A home loan EMI calculator is an online financial tool that assists in calculating the loan instalment towards your housing loan. It helps in assessing the payable EMIs for a proposed loan amount at a given rate of interest and loan tenor instantly. A proper understanding of EMIs, especially before availing of a housing loan, will serve to manage finances effectively.
The main advantage of a home loan EMI calculator is that the borrower gets an idea of the payable EMIs according to their budget even before availing of a housing loan. It helps in making certain financial decisions efficiently, which aids in the smooth repayment of home loans in the near future. Some of the benefits of financial planning using a home loan EMI calculator are provided below:
- Helps in assessing payable EMIs in advance:
Through the housing loan EMI calculator, you can assess the payable EMI before taking a housing loan. You can understand and estimate the EMI amount suitable for you. Assessing your monthly EMI obligations beforehand will not only help in determining the loan amount that you will easily be able to repay but also with financial planning.
- Analyzing Prepayment:
An idea of payable EMIs in advance can help prepayment planning, which can in turn, help in reducing interest rates. At times when borrowers have extra funds for making prepayments, with aid of EMI calculator. They can analyze total interest and see how prepayment will help with paying off the loan before the term ends.
- A better understanding of Savings and Expenditure:
While availing home loan, a majority share of one’s savings is invested as down payment and other loan processing charges. EMI calculator allows to make better decisions about your budget, as you can understand instalment, which help in managing expenditure.
- Choosing Suitable Loan Tenor:
Home loan with longer tenor can yield lower EMI than home loan with shorter tenor when all variable remains constant. With a home loan EMI calculator, you can decide if you can afford to pay a high EMI by opting for a short loan tenor for paying off the loan quickly or choose to pay a relaxed/lower EMI and extend the loan tenor.
- Compare between different housing loans:
Various lenders provide home loans at different rates in the market. An EMI calculator can help in comparing the overall costs of different loans offered at different interest rates. This helps the borrower narrow down on the best option and choose the lender according to their suitability.
How to Use Home Loan EMI calculator?
You can calculate EMI for proposed loan by feeding determinants, such as principal amount, interest rate, into the EMI calculator. The mathematical formula employed for calculating EMI is:
E = P×r ×(1+r)n
(Where E is EMI, P is principal of loan amount, r is rate of interest, and n is loan tenor. It should be noted that the monthly EMI amount is fixed. However, with the passage of time, you will pay less towards interest & more towards principal).
You don’t need formula while using loan calculator, you enter variables, like loan amount, and loan tenor to get answers.
Once you enter values, EMI calculator give you monthly EMIs, also give total interest you pay and make towards loan. Using Bajaj Housing Finance EMI calculator, you compare different loan tenors to figure out EMI as per your budget. Online EMI calculator never show incorrect results, thereby saving you from making any errors while making important financial decisions.