Planning is essential at every point, particularly when finance is involved. Regardless of any task, proper planning is what will help you drive the right results. One of the most important aspects of financial planning comes in when you decide to borrow a Home Loan. It is important that you do not take a financial decision in haste. Before you take a Home Loan, it is essential that you do a good amount of research and prepare a thorough course of action. Home Loans are the loans which involve hefty amount and are for a long term period. Thus, you do not want to take a risk with it. For this reason, proper planning is essential, and one of the best tools to help you plan properly is the Home Loan EMI Calculator.
A Home Loan EMI calculator helps to plan efficiently. It plays a vital role in helping to repay the EMIs successfully. Every borrower is aware that when it comes to paying off Home Loans, there is a high amount of EMI and monthly interest involved. These have to be paid within a stipulated time. Furthermore, the tenor of the loan varies from 15-20 to even 30 years. Now if the debt is for a short-term it is manageable. However, in this scenario where an individual will spend the majority of his earnings paying the EMIs, a financial planning needs to be precise.
How does Home Loan EMI Calculator help?
Most of the people when taking a Home Loan go overboard as they are financially stable. Moreover, most of the time due to their regular income, they downplay the EMI part. However, it is essential for a Home Loan borrower not to get carried away while borrowing a Home Loan. It is important to address the repayment capabilities, and have a foresight about it. A Home Loan EMI calculator helps you immensely in this case. It will help you enumerate the EMI amount that you will have to pay if you select certain variables. But what are these variables? These variables are:
- Loan Amount
- Tenor
- Rate of Interest
A loan amount is inarguably the most considerable factor when borrowing a Home Loan. Apart from this, there are two other components, the rate of interest and tenor which are equally important. There are various Non-Banking Financial Companies and other financial institutions who have a Home Loan EMI Calculator integrated into their website. A borrower simply has to visit the website of the specific lender and check it out.
How does Home Loan EMI Calculator work?
As mentioned above, three variables are taken into consideration. There will be a slider for each variable which you will be required to move. So basically, the loan amount will have a slider ranging from INR 1 lakh to INR 1 crore. You can move it independently. Tenor will have a slider ranging from a period of one month to 240 months which can be moved independently too. Finally, the Home Loan interest rate can be set independently between 5% to 40%. Accordingly, you can evaluate the EMI by moving each of the sliders and get a fair idea about how much will you be required to pay under certain conditions. These are the three variables, any change in each variable will affect the EMI.
You can even opt to calculate Home Loan EMIs manually. For that, you will be required to use this Formula:
| E= | P x r x | (1+r)n |
| (1+r)n-1 |
Over here, E is the EMI, P is the principal loan amount, r is the rate of interest calculated on a monthly basis and n is the tenor.
A Home Loan EMI Calculator helps in determining the right loan amount along with calculation of interest outgo. It will make you aware of the EMIs that you will have to pay and thus, help you plan accordingly.
