By Arpan Dagar
One of the most significant milestones for a person is buying a house. At the same time, however, it also involves making substantial money investment at exorbitant rates that calls for well-planned investment based on financial commitments. In this context, managing one's home loan would begin with calculating the Equated Monthly Installment or EMI. A home loan EMI calculator in India could very well prove to be of great value.
We will talk about why the home loan EMI calculator is necessary, how they work, its benefits, and whether or not the income tax saving calculator can accompany the home loan EMI calculator to assist with better financial planning.
A home loan EMI calculator is an online device that allows the borrower to calculate the amount he would have to repay every month towards his home loan. It helps arrive at an accurate calculation of your EMI by giving due consideration to factors such as loan amount, the interest rate, and tenure.
Principal Amount: Amount of principal borrowed as the loan.
Interest Amount: Cost incurred due to lending as a percentage of the principal.
It tells you how much money you will need to save every month when repaying the loan. In that way, your finances will be assured of being kept balanced and not over-taxed.
Loan offers are available at any number of interest rates and on different terms by different lenders. Using a calculator, you can compare your EMIs for various loan offers and choose the one suitable to your budget.
The calculation of EMI by hand is quite time consuming and prone to error. A calculator gives instant results; hence you have time for other activities regarding financial planning.
Using EMI calculations, you determine whether the monthly pay is acceptable in your income. So you determine the amount of loan that fits well with your financial ability.
Most calculators also give you an amortization schedule wherein they give you the breakup of principal and interest components across the loan tenure. That way you can understand how your loan will be repaid over the period.
The step to use the Home loan EMI calculator is quite easy and simple.
Simply input how much you intend to borrow.
Just fill in a Yearly quoted rate from the loan company.
You decide, month and/years for the loan tenure.
Calculate your EMI, This would be automatic after computing using a calculator.
Thousands of such calculators are, in fact, designed in such a way that change in inputs may result in alteration in loan amount, tenure, and rate of interest, so that the calculator will further reveal the impact of changed EMI.
An EMI on your home loan lets you strategize about your repayments whereas a savings calculator on your income tax enlightens the kind of taxes being paid regarding your home loan.
Section 24 (b): Deduction up to ₹2,00,000 for interest that's paid for self-occupied houses.
Section 80 C: Deduction up to ₹1,50,000 for the principal payment done.
Section 80EE and 80EEA: Relief has also been offered for the first time house-buyer.
You can calculate approximately how much you will save in your income tax, depending on the relief you would avail for by taking help of tax deduction facility offered through the sections available with it, through an income tax saving calculator.
Input of the amount lent including the interest paid and detailed repayment of principal.
Income State Information: All you have to do is to type your taxable income and thereafter get the idea of the possible saving
Show Tax Saving: Calculations of tax saving one would be eligible for shall be done
1. Determine beforehand about affordability before borrowing
Use the EMI calculator to see how much will fit into your budget. EMI should not be more than 40-50% of your monthly income.
2. Optimal tenure
The longer the tenure, the lesser the EMI but the more interest to be paid. A shorter tenure results in a higher EMI but saves on the interest. The calculator is helpful in striking a balance.
3. Compare Interest Rates
Even a very small difference in the interest rates can make an enormous difference in your EMI. Compare the offers from multiple lenders using the calculator to get the best deal for you.
4. Tweak Your Tax Deductions to Work for You
Structure your repayment schedules to your best tax advantage. For example, under Section 24(b), it can sometimes pay to pay more interest upfront.
5. Savings for Other Important Financial Goals
With such a high level of knowledge about EMI and tax savings, one can save for other important financial goals like education, investment, or retirement.
1. Ignoring Other Costs
Some of the other costs which are rarely taken into consideration while paying EMIs include processing fees, insurance, and property taxes. But these are liable to affect the total cost for you.
2. Estimation of Repayment Too High
High interest levels due to borrowing above your income level can cause stress to the pocket. Use the EMI calculator to see if the loan fits your pocket.
3. Not Comparing Loan Offers
Loans offered by different lenders differ in terms. Compare through the calculator and choose the cost-effective option.
It is a long-term financial commitment. The most important thing one should do to avoid the financial stress of repayment would be to plan it. Making good decisions with proper estimates Home loan EMI calculator in India makes this easy.
This further optimizes finances by pairing up with an income tax-saving calculator; so, get ready to make use of tax benefits properly through such tools and budget planning and reach your destination towards becoming a homeowner and ultimately attaining financially healthy living status.
You are either buying a home for the first time or refinance your existing loan. These calculators are essential tools to do efficient financial planning. Grab an opportunity to make your journey towards acquiring a home loan smooth and trouble-free.