With a large amount and an extended repayment tenure, home loans are more of a commitment than a credit. Today, by approaching the right lender, you can avail up to 80% of the property as a housing loan to fund its purchase. While this loan remains a driving force to fulfill people’s housing dreams, it is always advisable to consider a few factors to bring out the best of your home advance. EMI
One such factor is the use of a housing loan EMI calculator to determine your EMIs. As these are long term loans that may extend up to 20 years, one must foresee and plan about the finances that will go into repaying the loan amount.
With the use of this calculator, you can arrive at the right decision as to the number of years you want this loan for, or the total amount you will be able to afford. Now, take a closer look at what a home loan calculator is all about before moving on to reasons that back up its use.
How do EMI Calculators help calculate the EMIs?
A housing loan calculator computes the EMI amount you will need to pay every month for the repayment of your credit. It also gives you an insight into the total interest you will pay by the time the repayment tenure ends.
To compute the monthly installments, you are required to input three specific details like –
- The total credit amount
- Your chosen loan tenure
- The rate of interest
After you provide these details, the calculator uses the amortization method to calculate your payable EMIs. Hence, if you change the home loan interest rates, or any other detail entered, it will compute a new EMI.
You may, therefore, arrive at a suitable EMI as per your repayment capacity. It also defines the loan amount you should avail and the tenure you should opt for.
With these details about what EMI calculator is and how it functions, you may now check out why it is advisable to calculate EMI before you take a house loan.
Reasons why you should calculate your EMIs before taking a house loan:
- You can make a sound financial plan for the coming years
With the computed EMI amount, it becomes easier to make better financial plans for the future. Like, if you have decided on a given loan amount and tenure, computing the EMI as per this input can give you an insight into whether you can go for a more substantial amount or not.
- It helps find your eligibility for the loan
If you know your home loan eligibility beforehand, it reduces the chances of application rejection. Once you have calculated the payable EMI using home loan eligibility calculator, you can check your debt-to-income ratio, which is one of the factors that affect your home loan eligibility. With such eligibility, you can get a high-value loan of up to Rs. 5 Crore from reputed NBFCs.
- You can compare and choose the best lender and streamline finances
As different lenders offer housing loan at varying interest rates and loan tenure, calculating EMIs with an EMI calculator makes it easy to compare the offers. You can thus choose the best lender to avail a loan.
With this, you get a clear picture of your finances that go towards house purchase, and also plan for part-prepayment or foreclosure. Hence, it is always advisable to calculate your EMIs before you apply for a loan. With an estimated amount, you can proceed with the steps to easily get a home loan in India.