How to Use Home Loan Calculator for Calculate Home Loan EMI

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To secure the best deal on home loan interest rates, individuals carry out all calculations beforehand, plan extensively in advance, approach multiple lenders, and so on. Mostly, these measures prove to be fruitful for borrowers. Interest rates directly affect the EMI, the monthly instalment that is required to be paid by the borrower to repay the loan. The EMIs include the payment of the principal amount and the interest payable on the loan. The struggle to choose an appropriate EMI that does not adversely affect one’s monthly budget is real. When people do not plan well, the EMI amount becomes so sizeable that a chunk of the monthly income goes towards the payment of the EMIs only, leaving the borrower feel cash-strapped. Hence, one must make sure that one is borrowing the amount one can easily repay. A home loan calculator is one such tool that can help you choose lower home loan EMI. How? Before we answer this question, let us look at what is a home loan calculator and how does it work ?

What Is a home Loan Calculator?

home loans are secured loans and therefore, one can get these quite easily. The enticing features of the loan also make this financial product a preferred choice for many individuals. At the time of availing of a home loan, however, you should do you financial planning well as you are pledging your property as collateral. A house loan calculator is specifically designed with the goal of making loan-related calculations easy for the borrowers. Manual calculations can be complex and tedious. They also have the possibility of errors. With a home loan calculator, which is available online and is free-to-use, you can calculate the EMI you will have to pay every month to repay the loan. Further, the schedule and the breakup of principal amount and interest payable can also be seen. Having this information will help you make an informed decision. 

How Does a home Loan Calculator Work?

Banks assess the market value of a property while approving the principal loan amount. Approval of applications submitted is subject to finding the eligibility of the individual satisfactory for the home loan. On the approved home loan amount, a certain percentage of interest is levied. The repayment tenor chosen affects then the EMI amount through which borrowers settle the loan. 

Like other loans, a home loan EMI is also dependent on the loan principal amount, selected repayment tenor and home interest rate. Users of a home loan calculator must enter details about these three factors to calculate their EMI. You can change any one of these factors and perform another calculation and the calculator will immediately show you the results. Performing comparisons between the offers of different lenders is also possible through this calculator. 

Choosing Lower EMI with home Loan Calculator

If you want to reduce your home loan EMI, here is what you need to do and here is how you can do this using a home loan calculator. 

• Repayment tenor: Changing your repayment tenor can increase or decrease your monthly instalment amount. With a home loan Interest calculator, you can continue to try different combinations of tenor and principal until you receive the desired EMI. If reducing the loan EMI is your goal, you can increase the repayment tenor and decide to repay the loan over a longer period. The calculator will show you exactly the amount by which your EMI will decrease once you increase the repayment tenor. Remember that increasing the tenor of the loan can make the home loan costlier.
• Loan comparison: Different lenders will offer you different home interest rates. This will certainly affect your loan EMI. You can change the interest rate in the housing loan EMI calculator and see how each new value will affect your EMI payments. If a home loan is offered to you at a lower interest rate, your EMI will go down. These complex calculations can be accurately performed with the calculator. 
• Planning loan pre-payment: This is considered an effective way to bring down the EMI, if you have surplus funds. The calculator can produce the amortization schedule. Once you know the amount of lump sum payment, change the outstanding principal amount to see the effect of the same on the EMI amount.

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• Accuracy: House loan calculators give you accurate results within seconds. This accuracy in calculations means that you do not have surprises to face because of the possibility of errors. Also, accurate results help you plan your finances better.

While selecting EMI, giving due consideration to future financial hardships can be in the interest of the borrower. A lower EMI considerably reduces the chances of delaying the payment of the EMI, too. Banks give you the option of selecting up to 20 years for repaying the loan. With the features of housing loan EMI calculator mentioned above, you can avoid making mistakes and choose a lower and manageable EMI for yourself.