Home loan calculator: A tool that helps you to make a calculated decision
Housing loans are a long-term, high-value financial product, that demands efficient management and knowledgeable decision making to avoid facing payment defaults. Since failing to pay EMIs on time can harm your financial record, it is imperative to find an instalment amount and repayment plan that suits your financial capabilities.
In this regard, using a home loan EMI calculator can be of great help. Online devices like these allow individuals to find a monthly repayment schedule that is in line with their repayment capacity.
Advantages of using EMI calculator
The home loan market in India is projected to grow at a rate of 22% between 2021 and 2026. Therefore, if you are planning to apply for one, learn the advantages of such online devices, and how they can benefit your cause.
1. Ease of access and usability
An online house loan calculator usually comes with a user-friendly interface, which is easy to use. All a user needs to do here is to enter various details of a loan, like principal amount, interest rate and tenor to determine their estimated EMI amount.
For those who are wondering how to calculate EMI using this online device, here is a step-by-step guide:
Step 1: Visit the website carrying the housing loan EMI calculator
Step 2: Enter details of your loan scheme
Step 3: Get the monthly instalment amount instantly
After that, users can use the slider option, or enter different loan values to find a loan repayment structure suitable for them.
2. Accuracy in calculation
One of the notable advantages of using this online device is the accuracy it offers over manual calculation. Usually, EMI calculation entails using an intricate formula which can lead to mistakes at times.
On the other hand, this online EMI calculator comes with a built-in automated formula which eliminates the risk of incorrect results. Therefore, taking assistance from this online device helps one to find the correct EMI amount, every time.
3. Instant results
The formula, fed automatically into the calculator’s system, helps compute EMIs of a housing loan within just seconds. It eradicates the risks associated with lengthy manual calculation and also offers prompt results. Hence, borrowers get to save a lot of time, resulting in a hassle-free and convenient experience.
Online calculators use the below-mentioned formula to compute EMIs –
● EMI = [P x R x (1+R) ^N] / [(1+R) ^N-1]
Here, P is principal amount, R is rate of interest, and N is loan tenure.
Here is an example to demonstrate an EMI calculation using this formula –
An individual plans to apply for a housing credit of Rs.25 lakh for 20 years at 7%. As per the formula, the EMI will be –
EMI = [P x R x (1+R) ^N] / [(1+R) ^N-1]
= [25,00,000 x 7% x (1+7%)^ 240] /[(1+7%) ^ 240- 1]
4. Customisation option
Another notable perk of using an EMI calculator for home loan is that borrowers can make various alterations to their loan inputs to find a favourable combination of tenor, instalment and total loan amount. It will help them to make a more knowledgeable decision choosing the right loan offer.
5. Access to an amortisation schedule
Online home loan EMI calculator also provides access to a loan amortisation schedule. This sheet contains a detailed break-up of one’s EMIs from the start to the end of the loan tenor. It also offers an insight into the division of interest and principal components in EMIs, helping prospective borrowers to plan their finances beforehand.
6. Compare loan offers
The liberty to make various adjustments also helps borrowers compare different loan principal and EMIs effortlessly. This aids prospective borrowers to find a combination that is more suitable to their repayment capacity and in line with their financial planning. This is, in fact, one of the prominent advantages of computing EMIs before taking a home loan.
Prospective borrowers can also take assistance from this financial tool to compare loan offers extended by different financiers and choose the one that suits them the most. Notably, besides factoring in the interest rate and other features extended by a financier, individuals must also check the extra charges imposed on the loan amount.
Besides offering access to a free online calculator, leading financiers also extend pre-approved offers that streamline the loan application process. These offers are applicable on multiple financial products including home loans, loans against property, and many others. Prospective borrowers can check their pre-approved offers by submitting their essential contact information.
An online tool like a home loan EMI calculator facilitates the financial management process for borrowers. It offers an insight into the loan repayment and helps to find a suitable deal that meets an individual’s credit needs.