Everyone wants to buy their dream home, but few people have enough savings to tackle such a large financial undertaking. However, it is now far more affordable to buy your dream home without any hassle because there are numerous lenders available in the market, such as banks and NBFCs, that offer loans at low interest rates and other favorable lending terms.
A home loan works on the simple concept of the borrower pledging their property with a lender as collateral for the duration of the loan, and once the borrower has repaid their home loan amount in full, ownership of the house is transferred back to the borrower. This necessitates meticulous financial planning because if the borrower fails to repay the loan or defaults on the EMI's, they risk losing their property because the lender has a legal claim on the property and can liquidate it to recover their losses.
A home loan EMI calculator is an online tool that can assist you in determining your home loan affordability. Because this online tool is free to use and operates on the basis of an algorithm, you can be confident that you will receive accurate results every time.
Here is how you can use a housing loan EMI calculator:
Step 1: Visit an online home loan EMI calculator of your choice.
Step 2: You will be required to enter the following details:
- Principal loan amount that you require.
- Interest rate that you have been offered.
- Tenor period that you are comfortable with.
Step 3: Submit the following details to view the results:
- Monthly installments
- Loan Amortization Schedule
- Total Interest Payable
- Total Loan amount
You are free to make as many changes as you need within the calculator to get the results you want, and by doing so, you will establish the EMI that is best suited to your financial capabilities.
Here are some of the factors that affect your housing loan eligibility:
CIBIL Score
Every lender will conduct a thorough background check to better understand your financial history. Your CIBIL score is one of the most important factors to consider because the lending terms you will receive are determined by your CIBIL rating, and a score higher than 750 will ensure that you receive favorable lending terms.
Debt-to-Income Ratio
A lender will consider more than 50% of your income for home loan repayment, but if your existing debt consumes more than 50% of your income, you may not be approved for a home loan or will be approved for a home loan at a higher interest rate for a shorter term, which comes with a higher EMI.
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