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Home Loan EMI Calculator: Your Ultimate Tool for Financial Planning

Tool for Financial Planning

Home loans allow homebuyers to realize their dream of becoming homeowners. However, a home loan is a long-term commitment that easily lasts 20 to 30 years. Further, housing loans make big-ticket expenses because the EMIs take up a considerable portion of one’s monthly income. Individuals planning to apply for a home loan are therefore advised to do so after proper research and planning. A home loan EMI calculator is an online tool that aids with home loan application and repayment planning. 

This article aims to inform its readers about the benefits of a home loan EMI calculator and why every home loan applicant must use this tool before beginning the home loan application process. However, before we get on to this task, let us understand what is a home loan EMI calculator and how to use one.

What is a Home Loan EMI Calculator and How to Use One? 

A home loan EMI calculator is an online tool that home loan applicants can use to know their tentative EMIs for the loan amount they wish to borrow and the loan tenor they plan to go for. The home loan EMI calculator also gives home loan applicants their repayment or amortization schedule. These calculators are available on the websites of almost all major lenders and it is recommended that anyone planning to apply for a loan must use them. But, how does one use a home loan EMI calculator? Using the home loan EMI calculator is easy. Simply follow these steps: 

  1. Access the home loan EMI calculator on your lender’s website. 
  1. All home loan EMI calculators either have toggle bars or boxes where you can input the desired amount. For instance, if your desired loan amount is Rs.50 Lakh, enter this value in the loan amount field. If your desired tenor is 20 years, either use the toggle bar to move the bar to 20 years or simply input the value in the field. Finally, enter the rate of interest that you think will be offered. As soon as you enter these three values, the home loan EMI calculator will give you your EMIs along with your total interest outgo and the amortization schedule. 
  1. If you can afford the EMIs you see on your screen, go ahead and make the loan application. If the EMI seems unaffordable or if you can afford to take on the responsibility of higher EMIs, move the toggle bars or change values in the boxes till you arrive at an EMI value that works best for you. 

Let us now look at the benefits of a home loan EMI calculator and why borrowers must use this handy tool. 

Top 4 Benefits of a Home Loan EMI Calculator

1. It Helps You Compare Home Loan Offers 

Borrowers planning to avail of a home loan are advised to reach out to as many lenders as possible and negotiate with them for a low interest rate. If you do this exercise, you will have several different offers to choose from, and making the right choice would require you to do a comparative analysis of all the offers. A home loan EMI calculator will help you do that and figure out the best loan offer for you. Using the home loan calculator, you will be able to assess the total cost of borrowing each loan as well as your EMI for each loan. Having these figures at your disposal will certainly help you make the right decision. 

2. It Helps You Decide the Right Loan Value and Loan Tenor 

Planning to apply for a housing loan? Make sure to choose the right loan amount and loan tenor. Applying for a loan amount higher than you can easily afford to repay will make the process of loan repayment difficult. Similarly, opting for a very long tenor will increase the cost of borrowing the loan. On the other hand, keeping the loan tenor too short may make your EMIs affordable. A home loan EMI calculator helps you figure out the right combination of loan value and loan tenor so that repaying the loan does not become a burden for you. 

3. It Saves You from Late Fee and Penalties 

A home loan EMI calculator helps borrowers figure out the loan amount they can afford to easily repay. When borrowers borrow what, they can easily repay, loan repayment becomes easy and the probability of a person defaulting on loan repayment goes down too. Thus, a home loan EMI calculator keeps borrowers from defaulting on loan repayment and saves them from late fees and penalties, all of which can considerably add to the cost of borrowing the loan.

4. It Helps Figure Out the Right Time for Loan Repayment and Foreclosure

Almost every home loan borrower wants to repay their loan before the agreed-upon time and become debt-free as quickly as possible. Prepayments help in this regard. Home loan prepayment refers to the process of making lump sum payments towards the repayment of the loan money. Prepayments help reduce the loan amount and therefore, the effective interest rate. Foreclosure, on the other hand, refers to the process of paying off one’s entire remaining home loan amount in one go. Prepayments and foreclosure prove effective when opted for at the right time. 

These facilities must ideally be availed of during the early years of one’s loan tenor when the interest component of one’s EMI far exceeds the principal component. A home loan EMI calculator helps home loan borrowers figure out the right time for prepayment and foreclosure and understand how a prepayment will affect one’s loan EMIs and loan tenor.

Final Words 

A home loan EMI calculator is a very useful tool. It is quick and accurate. It helps borrowers save time and it can be trusted to deliver accurate results every single time. It helps home loan borrowers experience a smooth and hassle-free loan application process and a stress-free repayment journey. Therefore, all individuals applying for a home loan must necessarily use this tool. 

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