The availability of various online calculators has made EMI computing easier. For example, a home loan EMI calculator is a user-friendly tool that helps individuals compute monthly payables on the loan amount.
An online home loan EMI calculator helps calculate the monthly payables on principal, tenor and applicable interest rate. Once individuals enter the required information, the calculator displays the amount payable with the stipulated tenor.
How does the calculator work?
As the house loan EMI calculator is an online tool, it is based on an algorithm that uses a mathematical formula to calculate EMIs. In addition, this calculator allows individuals to view the repayment schedule for the entire tenor.
Underlined below is the method of calculating house loan EMI manually:
The mathematical formula to calculate EMIs is as follows-
EMI = [P x R x (1+R) ^n] / [(1+R) ^ n-1]
Here,
P= Principal loan amount
R= Interest rate
N= Repayment tenor in months
Process to use an online home loan calculator
Individuals must conduct market research before deciding on the suitable EMI and the tenor. Underlined below is the step-by-step guide to using a home loan calculator for easy computation of loan EMIs:
Step 1: Visit the official website of the selected lender.
Step 2: Navigate to the home loan section and select the calculator tab.
Step 3: Enter the required tenor, loan amount, and interest rate.
Step 4: The monthly payable will display on the screen.
Benefits of using the home loan EMI calculator
Leading financial institutions have made the calculator available for free so that individuals can calculate EMIs before availing of a home loan. Following are its benefits:
- Easy and accurate calculation
Home loan EMIs can be easily calculated by entering the loan tenor and the interest rate. It allows one to check the exact monthly instalment he/she needs to pay. However, it is advisable to compare lenders since the interest rates usually vary from one lender to lender.
- Financial planning
The primary benefit of calculating EMIs before taking a home loan is that it allows one to plan finances accordingly. As a result, one can easily manage his/her previous liabilities and monthly budgets properly to avoid a liquidity crisis.
- Choosing the right tenor
One can quickly check the monthly instalments payable on different loan tenors. Thus, one can decide whether one should opt for a short or a long-term depending on his/her repayment capacity.
- Managing pre-payments
Often borrowers decide to pay higher funds as down payments so that EMIs become manageable later. One can check the EMI amount after deducting the particular sum in this scenario.
Factors that affect EMI
The principal, tenor and interest rate affect the EMI. It is discussed below in greater detail:
Principal- Home loan principal is directly proportional to EMI. That means if one opts for a higher principal amount, the EMI will be higher and vice versa.
Tenor- A longer tenor can increase the total interest outgo but reduce the EMIs. On the other hand, a shorter tenor can reduce the interest amount and increase the monthly instalments payable.
Interest rate- In case of a lower interest rate, the EMIs will be lower and vice versa. However, several reputed lending institutions offer affordable interest rates. Additionally, to streamline the process of availing a home loan, lenders extend pre-approved offers.
Read Also: Ways to Reduce your Home Loan EMI Burden
These offers shorten the whole process and help save time. Such offers are available on financial products like home loans, loans against property, etc. Prospective customers can submit their essential contact details to check their pre-approved offers.
Now that individuals know the process of calculating EMIs with the help of a home loan EMI calculator, they can plan their finances accordingly.
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