Are you set on buying a home and need a home loan to back you? A few tips come in handy when buying a home loan. One of them is chasing nominal monthly interest rates. An affordable interest helps manage the finances better by reducing the EMIs.
You could weigh up different offers if you could calculate the EMIs before buying a home loan. Also, fix an amount that fits your monthly budget. A readily available online tool called a home loan interest calculator determines your home loan monthly instalments. Let’s find out a few more benefits of using this tool and know the factors determining its accuracy.
The Benefits of Using a Home Loan EMI Calculator for Home Buyers
The home loan interest calculator is a financial planning tool that is both fast and exact. With just a few inputs, it calculates the EMI towards a home or land loan within a few seconds. Let’s find out other ways it benefits home buyers.
– Provides Precision
Usually, manual calculations are prone to miscalculations and may occur without you recognising them. With the home loan EMI calculator, you can rely on the calculations as they are done with great precision.
– Weigh Up Different Loans
This tool helps compare a home or land loan from different banks and make an informed decision. The results reveal the total cost of different loans and their EMIs. It helps in narrowing down the best loan to suit your specific requirements.
– Helps Resolve The Repayments
With an exact EMI amount, you can resolve a tenure that is right for you. You can analyse whether you can pay a high EMI and pick a short tenure. Or choose to pay a low EMI over an extended loan tenure.
– Supports In Addressing The Prepayments
While paying your EMI, sometimes you may have extra funding for prepayments. You must assess the repayment options and see if you can pay the loan before the term ends. A home loan EMI calculator will help you find the prospects.
The Factors Determining The Accuracy Of Home Loan EMI Calculator
The formula used to calculate the EMI is depicted as [P x R x (1+R) ^n] / [(1+R)^ n-1]. Here, P = Principal amount, R = Rae of interest and n = Number of monthly instalments. A home loan interest calculator studies these factors to ensure accuracy while calculating your EMI. Learn more about these factors that determine the accuracy of the calculator.
– Principal Amount
The principal amount is the loan you borrowed or agreed to pay back. It is directly proportionate to your EMI. The more the loan amount, the higher the EMI will be.
– The Monthly Interest Rate
The interest rate is what you pay for borrowing the principal. The higher the interest rate, the higher the EMI will be. Therefore, find a lender that offers the lowest interest rates as it helps lower your home loan EMIs.
– The Tenure of the Loan
The period you take to repay the amount you borrow is called tenure or the period of the loan. It is inversely proportional to the home loan EMI. It is determined based on your age when buying the home loan and your retirement age. The longer the tenure, the lower its EMI will be.
– The Processing Fee Of The Loan
The lender decides the minimum or maximum fee to process your home loan application. You can look up this amount in your loan documents. A portion of this fee will be payable at the time of application.
– The Prepayments During The Tenure
Making prepayments on your home loan helps you decrease the due principal. It, in turn, also lowers your monthly interest charges.
And when both are put together, they decrease your EMIs if you choose to keep the tenure ongoing.
A home loan is a long term financial commitment. You must weigh all your options at every step, especially the home loan cost, whose affordability depends mainly on the EMI.
Therefore, it is essential to confirm the effectiveness of offers based on their respective EMIs using a home loan interest calculator.