We all dream of having our own house. And in today’s overly costly world, a home loan is one of the best ways to make your dream come true. However, as easy as it may sound, home loans are a big liability. They do make our life easier, but they come at a price. And this price is the interest rate on home loans. If you take out a loan, you will be required to repay it in installments with interest. For this, you also may have to cut down on your regular expenses. And in case you don’t plan out properly, it can cause a lot of issues later on.
It is always advisable to first plan your best home loan in advance and then get one. And how do you plan it? Firstly, do a lot of research. Then compare different plans, financial institutions, interest rates, tenure, etc. To help you compare different plans and interest rates, every bank has an online EMI calculator.
What is a home loan EMI calculator?
A home loan EMI calculator is an online tool that helps you calculate the monthly installment amount. An EMI calculator can be a lifesaver. Manually calculating EMIs based on principal amounts, tenures, and interest rates is time-consuming. You also tend to make mistakes while doing so. But with an EMI calculator, there are no chances of any error. Plus, you get all the results within seconds. The only thing you have to do is add the numbers, and let the calculator do its job. You can enter your principal amount, repayment duration, and interest rate range using different fields. After you enter your loan details, the home loan EMI calculator calculates the EMI you will need to pay on your loan. A calculator’s interface is typically user-friendly, and most adjustments are tailored to the individual user’s needs. You can either enter the number or just use the slider to input the numbers.
How to use an EMI calculator?
Use the below formula for calculating the EMI
P x R x (1+R)^N / [(1+R)^N-1] where-
P is your Principal loan amount
N is your loan tenure, in months
R is your monthly interest rate
How can a home loan EMI calculator help you with better financial planning?
By using an EMI calculator, you can calculate the exact amount of money you need to repay your loan each month. Besides reducing manual labor, this allows you to compare different plans and make an informed decision. This also gives you an idea of the amount that you can afford to borrow. Therefore, it is essential to calculate EMIs before you apply for a home loan and plan the home loan process of getting a loan.
Some years back it was very difficult to know about the EMI unless you talk to the banks’ representatives. But now with the loan EMI calculator, you can get an idea about the EMI amount and plan your finances well. You will be able to plan your monthly expenses, understand if you can afford to take a loan right now and do all of this without the hassle of going to different banks.
In addition to the ways outlined above, you can also benefit from a home loan calculator in other ways.
Adjust your future expenses
Just like buying a house is one of your future plans, there must be other plans too. You can reanalyze and see which plan can be postponed and how you can save some money.
The right financial institution
Different banks offer different options for home loans. Some may offer lesser interest rate and more tenure while some may offer higher interest rate and lesser tenure. All of this can make a huge difference in your EMIs. All the lenders have their own EMI calculators on their websites. In some of them, the interest rate is auto-filled which makes it very easy for people to compare the two.
The right loan amount
The fact that you’re getting a loan doesn’t always mean you need to go overboard with the budget. Maybe you don’t need that much money and you can manage less. Using an EMI calculator will give you a fair idea of how much you should ask from the lender.
No awkward conversations, no going over the budget, no sudden financial pressure. In a gist, an EMI calculator makes the loan process way too simple and profitable. So, before you apply for the loan, make sure to use the EMI calculator.