Buying a home can be very exciting as well as rewarding. But at times, things can become quite challenging, especially regarding financing.
For many people, a home loan can be a much more practical way to live their dream of owning a home. Taking on a home loan is the most crucial financial commitment requiring careful planning and much management.
Due to this, one can take the option of a home loan EMI calculator.
What Entails Home Loan EMI Calculator?
With the help of a Home Loan EMI Calculator, one can calculate the Equated Monthly Installments (EMI). To explain the concept of EMI is the fixed monthly payments that one must make towards their home loan until repaid in full.
Furthermore, the EMI comprises two components. The first component is the principal amount. The other component is the interest on the loan.
How Does a Home Loan EMI Calculator Work?
A Home Loan EMI Calculator works based on three inputs:
- the loan amount,
- the interest rate, and
- the loan tenure
The calculator will automatically calculate your EMI as you put these values or amounts. If you want to take a home loan of INR 50 lakhs for 20 years at an interest rate of 7%, the EMI would be approximately INR 39,989.
Steps to Calculate Your Home Loan Using an EMI Calculator
Understanding the amount of EMI while calculating your home loan EMI using a Home Loan EMI Calculator is easy. Here are the steps to follow:
Step 1: Input the Loan Amount
You must enter the amount you want to borrow from any banking or non-banking financial institution. You must repay the principal amount in monthly instalments and the interest the lender charges you.
Step 2: Input the Interest Rate
After you input the loan amount, you must also enter the interest rate charged by the lender. Interest rate is the percentage of interest you pay on your home loan yearly.
Step 3: Input the Loan Tenure
After the loan amount and the interest rate, it is now time that you enter the loan tenure in months or years. It is the duration of the loan, i.e., the number of years or months you will take to repay the loan.
Step 4: Click on Calculate
When you have entered the above details, click the ‘Calculate’ button. As you do this, the EMI calculator will display the Equated Monthly Installment (EMI), the total interest, and the total amount payable.
Step 5: Analyse the Results
It would help to remember to analyse your EMI against your monthly income and expenses. Only invest in the loan amount if the EMI fits within your budget. If it doesn’t fit your budget, you must adjust the loan tenure, principal amount, or interest rate until you find an EMI that works for you.
Step 6: Make Adjustments
Alternatively, you can adjust the principal amount, interest rate, and loan tenure in the Home Loan EMI Calculator until you arrive at an affordable EMI. It is imperative to keep your budget at a manageable amount when you are planning to make monthly EMI payments.
Using a Home Loan EMI Calculator to calculate your home loan EMI can help you plan your finances better and make informed decisions. You only need to input accurate details to get a precise estimate of your EMI. A home loan is a significant financial commitment that requires careful planning and management. Only a Home Loan EMI Calculator can help you make your loan-taking process more accessible and manageable.
Why Should You Use a Home Loan EMI Calculator?
It helps you plan your finances
A home loan calculator helps you plan your finances. It clearly shows how much one must pay towards their home loan as monthly EMI. The calculator helps budget monthly expenses and manage finances better.
Also, knowing your EMI in advance will help you plan your other investments and expenses, including insurance, education, or retirement savings.
It helps you choose the suitable loan tenure
A Home Loan EMI Calculator will also help you determine the ideal loan tenure that might suit your budget. If you choose a shorter loan tenure, it means you will pay a higher EMI. The plus point is you will have to pay less interest over the loan’s duration.
With the help of a Home Loan EMI Calculator, you can find the right balance between the EMI and the interest payable.
Compare different loan options
An EMI Calculator can help you compare different loan options available in the market. When you input different loan amounts, interest rates, and loan tenures, you can see how each impacts your EMI. With the help of this system, you can choose the best loan option that suits your needs and budget.
It helps you save money
The Loan EMI Calculator can help you save money by giving you an idea of the total interest payable over the loan tenure. When you compare different loan options, you will see various options. From there, you can choose the one with the lowest interest rate. It will help you save a significant amount of money over time.
It helps you plan for prepayments
The Loan EMI Calculator can help you plan for prepayments. These prepayments are extra payments made towards the principal loan amount, which can reduce the overall interest payable and shorten the loan tenure.
Only by using the tool can you see how prepayments can impact your EMI, and this will allow you to choose a prepayment amount that works for your budget.
Documents Required for Taking a Home Loan
Here is the expected list of documents for a home loan that most lenders require:
- Proof of Identity:
- Proof of Address:
- Income Proof:
- Property Documents:
- Employment Proof:
- Bank Statements:
- Other Additional Documents
A Home Loan EMI Calculator is an essential tool for anyone planning to take a home loan. It helps you plan your finances, and you can choose the suitable loan tenure or even compare different loan options and save money. A home loan is a binding financial commitment requiring careful planning and management. A Home Loan EMI Calculator can make the process easier and more manageable.