When individuals are looking to avail a loan to finance house purchase, it is likely that in most instances, one does not have adequate awareness about the calculation of repayment. Along with that, one also needs to know what could be the projected Equated Monthly Instalment (EMI). The EMI calculation may be complicated for individuals to do manually, which is why the best way is to use a home loan calculator.
Such a calculator is essentially an online tool that helps to determine the EMIs independently. It takes into consideration the principal amount, EMI, tenure, and the value of property to be financed. Home loan includes two elements – (i) Principal and (ii) Interest. These amounts will have to be paid collectively in the form of EMIs. The calculator provides scope for various changes in entered values for the determination of an optimal EMI amount.
Benefits of home loan instalment calculator
Some typical benefits of using such a calculator are mentioned below –
- Better loan management
In the course of paying off the debt, a customer may secure additional funds and decide to make prepayments. A home loan EMI calculator is an essential tool used to determine how such prepayment may be helpful and assess financials before the end of term.
- Choosing correct tenure
After determining the home loan EMI figure with the help of such calculators, an individual can decide on the appropriate loan tenure. It will help in understanding whether a high EMI would be affordable, and thereby, switch to a shorter period for paying off the home loan if it crosses one’s repayment capacity. If not, then an extended loan period can be opted with comfortable monthly installments.
- Simpler calculation
The manual calculation of EMIs is a complex process. If the calculator is used, a customer will only have to enter the home loan interest rate, the loan amount, and the tenure for repayment to determine the same. The EMI calculator will do the necessary calculation, and the EMI amount will be subsequently shown. Note that to plan your refinance properly, it is essential that you assess the EMIs payable, which is one of the essential things to know before taking a home loan.
- Comparison among different offers
When applying for the advance, a home loan EMI calculator will enable a customer to compare loan offers of various financial institutions. A calculator will show results regarding the total cost of the loan as well as respective monthly instalments. In effect, by calculating EMIs before taking a home loan customer will have adequate information at hand to choose the best option which will meet his or her specific requirements.
With manual calculation, there is always the possibility of error creeping in, leading to an incorrect result. Such incorrect results will end up presenting a wrong idea to the customer. Home loan EMI calculator, on the other hand, will show accurate results.
How to use a home loan EMI calculator?
The calculator helps borrowers to calculate accurate EMI amount to be paid each month. The interactive platform also shows the division of the amount in lieu of interest repayment and principal repayment, separately.
To use the calculator, specific inputs need to be entered –
- Tenure of loan
- Principal amount
- Interest amount
After determining the preferred EMI and loan tenure, one can continue to apply for a credit. There are several financial institutions that offer such advances to eligible customers. Some financial institutions may provide pre-approved offers to make the process of availing loan much simpler. Mostly, such offers are valid on various financial products like home loans and loans against property. Check your pre-approved offer online by providing few basic details such as name and contact number.
Hence, it is in the best interest of customers looking to avail a home loan to use a home loan EMI calculator for planning finances effectively. It should also be used to optimise the EMIs of the loan.