This post was most recently updated on April 27th, 2022
A home loan calculator is an online tool that allows prospective borrowers to calculate EMI beforehand. This calculator has multiple variables: loan amount, tenor, and interest rate. Individuals can alter this variable to settle for an affordable EMI.
Thus, if an individual is planning to avail of a housing loan, it is beneficial to have some advanced preparations to avoid hurdles in the future.
Benefits of using a home loan calculator
- Provides accurate results
When an individual uses the EMI calculator, this online tool provides perfect and accurate results every time. Manual calculations to get the EMI needs time using the complicated formula, i.e. [P x R x (1+R)^N]/[(1+R)^N-1], (where P = Principal, R = Rate and N = loan tenor in months).
Manual computation using this formula is time-consuming and prone to errors. Thus, using a home loan EMI calculator is better to compute EMIs efficiently.
- Gives fast result
A home loan calculator provides financial calculations within seconds. A user has to enter the variables, and this calculator will provide accurate details fast. Also, using this calculator minimises the chances of error and helps to manage finances properly.
- Provides amortisation schedule
One of the primary benefits of this EMI calculator is the amortisation schedule. This table consists of the detailed breakup of finances, thus assisting in managing a housing loan.
Additionally, these financial details significantly ease monetary calculations. If a prospective borrower knows about the financial liabilities beforehand, he/she can plan repayment accordingly.
- Allows customisation
As the home loan EMI calculator is equipped with 3 variables: loan amount, tenor, and rate of interest, users can easily customise them to settle for an affordable EMI.
- Free to use
This is important to note that lenders provide this EMI calculator free to prospective borrowers. Users can opt for it anytime to alter the variables and check the EMIs before settling for a suitable one.
- Allows to compare
This free tool allows users to compare EMIs from different lenders. This helps them make a knowledgeable decision on their terms.
Steps to using a home loan calculator
Step 1: Visit the official website of your preferred lender.
Step 2: Navigate to the EMI calculator page.
Step 3: Provide the desired loan amount or adjust the given bar to select principal amount.
Step 4: Enter the tenor or adjust the bar to select a suitable tenor.
Step 5: Enter the rate of interest.
Finally, the EMI calculator will provide you with all the home loan’s financial details, including EMI and total interest.
Thus, to apply for home loan, apart from knowing how to use the calculator and its benefits, it is also vital to know about the variables of the calculator. It is already mentioned that an EMI calculator has 3 variables –
This is the loan amount a prospective borrower wishes to borrow. It is important to note that this amount is directly proportional to the EMI amount. Hence, to lower the EMI, individuals must consider lowering the amount.
A tenor is inversely related to the EMI amount. A longer tenor will fetch a low EMI, while a shorter tenor will fetch a higher EMI. But, a longer tenor will increase the total interest paid thus, increasing the sum of interest. Hence, it is vital to choose the tenor effectively.
- Rate of interest
This variable is pre-decided by the lender and is directly related to EMIs. However, borrowers can negotiate this rate as it depends on multiple factors like credit score, loan amount, property location, and others.
Thus, applicants looking for a home loan in Kolkata or anywhere in India can keep this pointer in mind before opting for one.
A housing loan also comes with multiple home loan tax benefits under sections 80 C, 24, and 80 EE. Hence, it is advisable to check those before selecting.
In India, several financers extend pre-approved loan offers to expedite the loan application process. These offers are available on selected financial products, such as home loans, loans against property, and others. Applicants need to enter their names and contact numbers to check their pre-approved offers.
Hence, a home loan calculator significantly eases home loan planning for individuals. Along with this, the amortisation schedule assists in financial calculations for prospective borrowers.