September 20: A home loan helps borrowers realize their dreams of owning their home. This may be one of the long-term financial commitments. Therefore, borrowers should have a solid IME repayment plan ahead of time. The most convenient way to assess EMI payments is to use a home loan EMI calculator. This is a simulation that helps borrowers calculate the EMI amount, total interest, and overall amount to be paid.
The calculator helps borrowers by predicting a tentative repayment schedule and giving them a deeper insight into their home loan obligation. Plus, it allows borrowers to narrow down their searches to find the best loan option.
EMI Home Loan Calculator – Simple tool to plan a home loan
Here are the following ways a home loan EMI calculator proves effective in planning a home loan.
● Offers fast and error-free result
A home loan is an important financial decision, and you can’t afford to make mistakes in financial planning. Manual calculations are error prone and any miscalculation may result in unnecessary monetary burden. However, a home loan EMI calculator provides instant and 100% error-free results. Borrowers do not need to double check the calculation.
In addition, the calculator saves time. Borrowers will get instant results by entering the three variables: principal amount, interest rate and term of the loan, which will provide them with information on planning their finances and help them make an informed decision. For example, borrowers looking to calculate 25 lakh home loan EMI will have to enter Rs. 25 Lakhs as the loan amount, fill in the interest rate charged by a particular financial institution and the loan term that suits them and see the EMI amount.
● Help compare loan offers
The Home Loan EMI Calculator helps borrowers with benchmarking. Before comparing different lenders and their offers, borrowers should never settle for the first home loan. In this regard, the use of this financial tool will prove beneficial. It will allow borrowers to calculate EMI payments for different loan options based on respective loan terms, such as interest rate. A comparative analysis allows borrowers to position themselves advantageously and allows them to make the best choice according to their financial needs.
● Help choose an appropriate loan term
As borrowers can calculate EMI payments in advance, it helps them decide on the appropriate loan term. The term of the home loan influences EMI payments and interest expense. If borrowers can afford to pay higher EMIs, they can choose a shorter loan term. On the other hand, they can opt for an extended repayment term if they wish to reduce the burden of EMIs or if they have other financial liabilities to manage.
● Help to decide loan amount
The EMI Calculator helps borrowers estimate the loan amount. Excessive borrowing can put a strain on one’s finances and increase the monetary burden. Borrowers get accurate monthly payment calculations, which further helps them decide on loan principal. Borrowers can try several combinations of loan amounts until they are sure which one they can afford to repay on time.
● Assistance with financial planning
Pre-calculating EMIs gives borrowers an idea of the full repayment schedule, helping them to make EMI payments on time and manage other financial liabilities at the same time. It helps in budgeting expenses effectively. Moreover, it allows borrowers to understand the amount of interest and principal they have to pay for the loan amount. The calculator helps borrowers assess their lifestyle and financial expenses and keeps aside how much they need to pay in monthly installments.
● Ensures simplified planning of loan prepayments
Using the calculator, borrowers can understand how prepayments will help them pay off the loan ahead of time and save on interest expenses. There are times when borrowers have extra funds. Using a home loan EMI calculator, borrowers can view their financial data and know how to use the extra funds to make prepayments, which is beneficial for loan management.
● Provides access to the amortization table
The Home Loan EMI Calculator provides borrowers with access to the amortization schedule. The amortization schedule shows the breakdown of the loan principal they have to repay over time. Also, the table displays the percentage of the interest rate and the principal amount they have to pay for the repayment of the loan amount. Access to this table simplifies loan planning, ensuring that borrowers do not miss EMI payments.
Know How the EMI Home Loan Calculator Works
A home loan EMI calculator uses the following mathematical formula to calculate the EMI installments that must be paid to repay the loan amount.
NDE = [P x R x (1+R)^N]/[(1+R)^N-1]
Where P is the principal amount
N indicates the duration of the loan
R represents the interest rate of the mortgage
Borrowers can change these variables and see the amount of EMI to pay for each loan option, helping borrowers choose the right lender and plan repayment schedules in advance.
Here are the steps that will help borrowers use a home loan EMI calculator:
Step 1: Go to the official website of the preferred financial institution and access the home loan EMI calculator.
2nd step: Next, enter the loan amount. You can also use the slider to set the amount.
Step 3: In the next box, enter the interest rate charged by the respective lender
Step 4: Enter the appropriate loan term.
By entering the three variables, the calculator will display the EMI amount, overall interest expense, and total loan amount in no time.
Plus, home loan calculators are free. Borrowers can use this calculator infinite times without paying for it. Moreover, borrowers can have a risk-free experience. They don’t have to reveal their identity or share their credentials to use it.
In summary, the best way for borrowers to prepare before taking out a home loan is to calculate the amount of the EMI beforehand and establish the repayment plan. As part of this, borrowers can use a home loan EMI calculator to calculate monthly payments. Additionally, knowing the EMI amount in advance streamlines the search for the best lender and helps borrowers repay loan amounts on time.