A home loan is a secured loan in which the mortgaged asset of the borrower acts as security. Hence if the loanee fails to repay the loan amount, the lender can sell his/her property to compensate for the loss. To avoid this problem, a borrower can use a house loan calculator to compute the monthly instalments appropriately.
What is a housing loan calculator?
The EMI calculator for home loans is an online platform that computes EMI for a housing loan. It enables a customer to compute his/her monthly loan instalment effortlessly. A borrower only needs to enter the chosen loan amount, rate of interest, and loan tenor.
After entering the home loan information accordingly, the housing loan EMI calculator will figure out the right amount a borrower must pay every month. The EMI payments will continue until the repayment of the total loan amount. Moreover, the calculator enables borrowers to schedule the home loan repayment as per their affordability.
What are the benefits of a house loan calculator?
The advantageous reasons behind which a borrower chooses a housing loan calculator are as follows:
Helps to choose an exact loan amount
Always go for a loan amount that can be beneficial and repaid without any hassle without causing any financial effect. Moreover, it is suggested for the borrowers to stay away from defaulting while repaying their loans as much as possible. But using a home loan EMI calculator will give a rough idea about a borrower’s affordability towards the home loan amount. As a result, repayments will become easier, and default chances will be reduced too.
Helps to choose right tenor
Repaying loan via EMI in monthly instalments relies on the home loan tenor. When a borrower chooses a longer tenor, it lessens home loan EMI amount. Similarly, choosing a short-term loan will upsurge the level of EMI. Hence a loanee can select a loan tenor alongside a reasonable EMI plan depending upon his/her monthly income and expenditure. For this reason, it is recommended to take the help of the EMI house loan calculator to figure out the ideal tenor.
Helps in prepayment plan
While availing a home loan, it is always better to make part-prepayments alongside monthly EMIs whenever possible during the tenor of credit. Thus, when a borrower has an estimation of the EMI, it will help them make a proper plan of prepaying the home loan amount. Nevertheless, it can diminish interest rate and enable borrowers to time the investments correctly and discard the debt at the earliest.
Provides accurate information
While computing EMI via a free online house loan EMI calculator, a borrower does not need to reveal their identity. This is because there are no such security issues present, and it is safe to use. The accuracy of a house loan calculator provides precise information to customers regarding their payments on home loan EMI. These enable borrowers to make proper planning on their housing credit. Sometimes, computing EMI values manually can comprise many errors. Therefore, it is recommended for borrowers to use this calculator for analysing the value before applying for a home loan.
For instance, there are plenty of financial institutions that provide pre-approved offers through which lending process is benefitted. They provide these offers on various financial products like home loans, loan against property, etc. Applicants can check their pre-approved offers by inserting details like their names and contact numbers.
Factors affecting home loan eligibility
Individuals have to check the following factors before applying for a home loan. They are:
- Credit score
- Previously existing debts
- Employment status
- Property details
Tips to reduce home loan interest rate
Here are some following tips to lessen home loan interest. They are:
- Select a shorter tenor
- Make timely prepayments
- Avail a home loan bank transfer
- Review EMIs every year
What is the formula to calculate home loan EMI?
Home loan EMI relies on principal amount, rate of interest and loan tenor.
The formula for computing housing loan EMI is mentioned below:
EMI = [P X R X (1 + R) N] / [(1 + R) N – 1]
P denotes the principal
R denotes interest rate (monthly)
N denotes number of EMIs (monthly tenor)
Lastly, a borrower needs to keep in mind all necessary conditions and guidelines before going for the loan. Hence instead of calculating the EMI amount manually he/she can take the help of a house loan calculator.