Know the Significance of a Housing Loan EMI Calculator

Manisha, a 35-year-old architect, bought a 3BHK for Rs.1 crore. She made a down payment of Rs.20 lakh and took a Home Loan. The equated monthly instalment (EMI) was Rs.59,000 as she opted for a 30-year tenor at an interest rate of 8%. To make sure the bank was not overcharging her, Manisha cross-checked the figure by using a Home Loan calculator.

Why are EMI calculators for a Home Loan important?

The amount of EMI you pay on a Home Loan depends on three key factors:

• the loan amount,
• the loan tenor, and
• the interest rate.

Using a Home Loan EMI calculator before taking a Home Loan can be helpful. The customer can then make an informed decision. S/he can figure out an approximate EMI figure based on the loan amount s/he needs. S/he can also compare loan offers from different lenders.

A housing loan EMI calculator is important for many reasons:

• It helps you plan ahead. A Home Loan involves a large amount of money that you will have to repay. So, taking such a loan requires some pre-planning. A handy EMI calculator can help in this regard.

• It helps you gauge your repayment capabilities. It is important to assess your repayment capabilities before taking a Home Loan. You need to be certain about your financial standing. Can you afford the loan repayments over 10, 20, or 30 years? An EMI calculator can assist you in making the right assessment.

• It gives you instant results and saves time. There is no need to make rounds of banks and financial institutions. An online EMI calculator can be your go-to tool today.

• It comes without a charge. You do not need to pay when using an EMI calculator. Use it as many times as you want free of cost.

• It ensures a hassle-free experience. All you need to know are the loan amount, tenor and interest rate. Enter the amounts to get an accurate result.

By using an EMI calculator, the customer can enter the details for different loan offers. It helps to try out different values in order to come upon a suitable EMI amount.

There are also Home Loan eligibility calculators to consider. Eligibility calculators help you to understand the eligibility criteria. While you are at it, you could also look at a Home Loan interest rate calculator. This could bring you further clarity on your Home Loan decision.

What tools can you use to calculate house loan EMI?

Microsoft Excel: Use the formula ‘PMT(rate, nper, pv)’ in an Excel sheet to get the result. Here, ‘rate’ is the rate of interest and ‘n’ signifies the number of instalments. Next, ‘per’ signifies the tenor and ‘pv’ stands for the loan amount.

Mathematical formula: Use the mathematical formula ‘EMI=pr(1+r)n/(1+r)(n-1)’ to know your EMI. Here, ‘p’ stands for the amount borrowed, ‘r’ for rate of interest, and ‘n’ for number of instalments.

Online EMI calculators: These are your simplest options. You can avail online EMI calculators on various lender websites. Most of these are quite user-friendly. Punch in the required inputs to get an instant result.

For example, 33-year-old Shekhar, a businessman, zeroes in on a property worth Rs.58 lakh. He can afford a down payment of Rs.8 lakh. That would leave him with a loan amount of Rs.50 lakh. He quickly looks up an online EMI calculator. He selects the loan amount, the interest rate (12%), and the tenor (20 years). The calculator displays the resulting EMI in a jiffy. Shekhar has to pay Rs.55,054 as the monthly instalment. Now, that he has a ballpark figure for what it will cost, Shekhar can take the next step. He can enter different values for the interest rates and the tenor. Finally, he can select the deal that suits him the best.

To sum up

A Home Loan may help you fulfil your dream of owning a house. But you should not end up reeling under the strain of EMI payments. EMI calculators and Home Loan interest calculators can help. You can verify the numbers before applying for a loan. Such calculators can help you zero in on an affordable repayment plan.

But there is a step that all Home Loan borrowers must cover beforehand. As you navigate the Home Loan marketplace, you must understand your financial situation. List out your income and expenses, and figure out how a Home Loan could fit in.