Fri. Mar 29th, 2024

With the surging prices of real estate in India, buying a house with a single payment can be quite strenuous financially for an individual. One of the most effective means of generating funds for the purchase of a house is a home loan. A home loan is an amount that is borrowed from a financial institution like a bank or a non-banking financial institution for the sole purpose of purchasing a home.

Are you thinking of buying a house with the help of a home loan? If yes, then it is a good idea to calculate your EMI amount before signing on the dotted line.

In this article, you will learn about the benefits of using the home loan calculator before applying for a home loan, what a home loan EMI calculator is, and how to calculate home loan EMI using a home loan EMI calculator. Read on.

What Is a Home Loan EMI Calculator?

A home loan EMI (Equated Monthly Instalment) calculator is an online tool that helps you know the EMI amount that you will need to pay towards your home loan, helping you make an informed decision.

With the help of an online EMI calculator for a home loan, you can accurately find out the EMIs (principal amount + interest) you need to pay each month for home loan repayment.

The Benefits of Using the Home Loan EMI Calculator Before Applying for a Home Loan

The affordability of your home loan mostly rests on your EMI. The EMI is the amount you need to pay consistently through the entire tenor of your loan. This is why it’s important to carefully select a lender who gives you approval on nominal interest rates before applying for a home loan. Getting financing on reasonable housing loan interest rates will ensure that the interest obligation towards your loan is kept under check.

It also maximizes your affordability, allows you to pay a lower EMI, and helps you manage your finances better. How else do you get to know an affordable EMI if not by using a home loan calculator? A house loan calculator helps you know the EMI amount that you will need to pay towards your home loan and also helps you make an informed decision.

The below benefits will show why you need to use a housing loan EMI calculator before applying for a home loan.

1. It Helps You Plan Out Repayment

Once you know how much you can afford to borrow based on the interest rates, adjust the tenor to arrive at an EMI you are comfortable with. This will help you plan your repayment better.

Measure your fixed expenses to see what your most crucial financial responsibilities are, and where you can cut back to ensure you pay your EMI promptly. This planning will help you stay stress-free through the tenor of the home loan, and also remove additional costs such as EMI bounce charges and penal interest.

2. It Helps You Decide How Much to Borrow

Calculating the EMI for your home loan in advance by using the home loan EMI calculator allows you to arrive at an amount that fits your monthly budget. You can use the home loan calculator available for free. Here, you can adjust the tenor and housing loan interest rate parameters alongside the loan amount to arrive at the most affordable EMI. Modify the amounts until you are completely sure of the EMI you can pay. Based on this calculation, you can apply for a home loan in a more informed way.

3. It Helps You Plan Prepayments

Knowing your EMI before applying for your home loan allows you to make prepayment plans that will help you reduce your interest payments and pay off your home loan sooner. For example, you can time your investments or save money every month to coincide with your home loan tenor and make part-prepayments with ease.

How to Calculate Your Home Loan EMI Using Online Home Loan EMI Calculator

Now that you know how important it is to calculate EMI before applying for your home loan, the steps below will guide you through how you can arrive at the most affordable EMI component for your loan using the home loan EMI calculator.

  1. Visit the home loan EMI calculator page and select the loan amount of your choice. For example, let us take Rs.50 lakh as your starting amount.
  2. Then in the next bar, select the tenor of your choice. In this case, let’s go for a tenor of 120 months (20 years).
  3. Then in the next bar, select the interest rate. Here, let’s assume you receive your home loan at a nominal rate of 8.40% from the lender.
  4. After entering all those, the 3 boxes at the bottom of the page will show your total interest payable, total payment, and your EMI respectively. In this case, these would be Rs.24,07,076, Rs.74,07,076 and Rs.61,726 respectively.

You can keep adjusting the amounts for each parameter until you attain an EMI that is affordable for you. Apart from this, once you are ready to take the loan, don’t forget to check your home loan eligibility criteria to maximize the chances of approval.

Final Thoughts

Almost all leading lenders offer EMI calculators on their websites. One such lender that offers you a number of tools to make the right choice is Bajaj Finserv. In just 3 simple steps, Bajaj Finserv’s home loan EMI calculator will save your worries by giving you an insight into the amount of EMI you’d be paying based on your specific loan type. Use their home loan EMI calculator today to ensure that you’re making the smartest financial decisions.

By Ashutosh Kumar

Hi, I am Ashutosh Kumar. Graduate in Journalism. Field of expertise is technology, automobile & lifestyle.

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