Must-know Aspects Of Emi And Home Loan Calculator

House Loan Calculator

Are you dreaming of purchasing a new house or remodelling an old one? If your answer is yes, it is safe to assume that you have already considered applying for a loan. But do you know how much your repayments will be if your house loan is approved? If not, you must use a House Loan Calculator and figure it out.

You, as a borrower, are responsible for EMI payments for the borrowed loan. Equated monthly instalment is referred to as an EMI. The term “EMI” describes a fixed payment made by a borrower to a lender to settle an outstanding loan within a specific period. The outstanding loan’s principal and accrued interest are paid off with the help of the EMI.

This article will teach crucial facts about EMI and House Loan Calculators.

10 Things to Know Regarding Home Loan EMI Calculators

  1. They are a self-help tool that calculates your equated monthly instalments.
  2. They provide information on your eligibility, EMIs, and the approved amount for your property.
  3. The EMI calculator works on a simple calculation. It goes like this: E = P * r * (1+r) n / ((1+r) n-1). Where: E stands for EMI, P is for principle, and R is for the monthly interest rate. Finally, N represents the loan tenure.
  4. They accurately calculate the EMI amount once you have entered the loan amount and repayment period. The calculator does not request information about your personal and professional life and the Home Loan documents list you have already given to the bank.
  5. EMI Home Loan calculators are available on most bank and NBFC websites.
  6. They explain your Home Loan payback schedule (also known as the Amortisation Schedule). The EMI will be divided into payments for the principal balance and the Home Loan’s interest rate.
  7. EMI calculators use a fixed interest rate to calculate the EMI.
  8. They let you compare the loan options provided by different lenders. In turn, this will assist you in selecting the best choice.
  9. They let you adjust and vary the loan amounts, tenures, and interest rates and test out various inputs to find the one that works best for you.

The calculation takes only a few minutes (after you have entered all the necessary information).

Factors Responsible for Home Loan EMI

Numerous variables affect the amount of your Home Loan EMI.

1. Loan Interest Rate

One of the biggest influences on House Loan EMIs is the variation in interest rates: fixed or floating. A floating interest rate could impact your Home Loan EMI positively or negatively. A floating interest rate will be more convenient if your income is flexible. Home Loan interest rates fluctuate due to changes in the worldwide market and RBI’s interest rate fluctuations.

Loan interest rates vary between lenders and various consumer segments within the same lender. It relies on several factors, including the client’s credit history and eligibility. The EMI will increase along with the interest rate.

2. Loan Duration

The precise amount of the EMI depends on the loan’s tenor. Even a small change in the tenor (EMI) can affect the corresponding monthly instalment. Longer loan repayment terms result in lower monthly payments, but the overall cost of interest rises, increasing the loan cost. You can opt for either a low EMI or a low overall borrowing cost by changing your loan tenure.

3. Loan Interest Type

Two different types of interest are applied to loans: floating and fixed. The interest area you wish to explore is your choice. If you obtain a loan with fixed interest, the EMI stays constant during the loan’s term and is unaffected by fluctuations in the interest rate. As opposed to this, the EMI for a loan with a floating rate fluctuates along with the interest rate.

4. Prepayment

The value of the EMI is also impacted by loan prepayment. Many businesses impose fines for prepayment or foreclosure. Nevertheless, it lowers the balance that is still owed, which reduces the interest and EMI. Prepayment is preferable if you have extra money. However, learning about the prepayment penalties and other terms and conditions is preferable before choosing a Home Loan.

5. Down Payment

Your loan requirement will decrease as you put down more money, resulting in a lower EMI. Normal practices call for a 20% down payment, but your monthly expenses will be lower if you can afford to pay more upfront.

Bottom Line

You may easily calculate your EMIs using the automated House Loan Calculator, simplifying your loan computations. NBFCs and other financial institutions provide online EMI calculators on their official websites. You may quickly and precisely calculate your EMIs using these calculators without paying any costs or fees.