Buying your own home is a dream for most of us. For that one has to avail of a home loan, which becomes one of the biggest financial commitments and needs proper financial planning. Proper financial planning makes it essential to organize your finances so that the loan EMIs is paid on time without default and also your household budget remains unaffected.
To organize this appropriately, you have to be aware of all details about your home loan– the total amount, the EMI’s and the tenure. The EMI depends on the amount you borrow, the interest rate charged, and the tenure period for which you have taken the loan.
A home loan EMI calculator is a financial instrument that helps understand the amount you’d pay as EMI towards your Home Loan. It helps to plan your finances in advance and take the decision wisely. It is convenient and uncomplicated aid, where the principal amount, tenure period, and interest rate, are entered to calculate to find out the EMI. Let us see how it benefits us –
As mentioned earlier, a home loan EMI calculator helps you to work out the EMI prior to taking the loan. This helps borrowers to plan their monthly budget more efficiently. Moreover, knowing your EMI in advance helps you to be prepared for future circumstances and eventualities.
For example, if you didn’t know the estimated EMI which your loan would cost you beforehand and you get to know your EMI after taking the loan. When you realize that you can’t afford to pay the monthly returns, it would land you in serious trouble. Using a home loan EMI calculator is the one solution to such problems.
Different lenders give a different rate of interest and tenure periods. Using the calculator, you can choose among the various lenders and can get one best-suited for you. The home loan EMI calculator will help you to know the EMIs which you need to pay to when you choose each lender. Based on the EMI, and total borrowing cost you can decide your lender.
Based on your requirements, you decide on a certain amount to borrow. Though borrowing is uncomplicated, the repayment is demanding and needs a lot to be worked out first. It is always advised to borrow only as much as you can repay easily. Using the loan EMI calculator, you can get to know your eligibility for a home loan and the repaying capacity. If you can’t afford to repay a particular amount, you can decide on reducing the principal amount to be borrowed, and then apply for a home loan according to your budget and finances.
Using the home loan EMI calculator, you can choose the right tenure for your home loan. One of the most important factors which decide your EMI is the tenure period of your loan. A long tenure reduces your EMI, whereas a short tenure means a higher EMI. Use the EMI calculator to choose the tenure as per your requirement.
The mathematical formula for calculating EMIs is-
EMI = [P x R x (1+R)^N]/[(1+R)^N-1],
where P is the loan amount or principal amount
R is the interest rate per month [e g. if the interest rate per annum is 10%, then the rate of interest will be 10/ (12 x 100)],
and N is the number of monthly installments.
But instead of doing all these calculations, the Home Loan EMI calculator on the website just requires you to fill up the details like-
and you will get the home loan EMI, Total Interest payable & Total Payment (Principal + Interest).