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Applying for a home loan is a big financial commitment – one that usually lasts decades. A home loan allows buyers to finance their purchase without draining their savings or compromising their dream house. However, your home loan planning doesn’t end with choosing the right home loan provider.
It involves a lot of financial and budget planning, from selecting a property that fits your budget to deciding on an affordable loan amount accordingly. And picking a suitable loan tenure and planning your EMIs is one of them. Why? Because before opting for a loan, you must know how much you can afford to pay as EMIs so that it is easier to plan your monthly budget accurately.
Using a home loan calculator is a simple way to estimate your EMIs. It is a free online tool that lets you calculate your monthly EMIs by using three key factors-
Principal amount
Loan tenure
Rate of Interest
Borrowers can enter various combinations of loan amount and tenure to arrive at an EMI amount that works best for them. It is an excellent money-management tool that allows borrowers to plan their repayments conveniently.
How can a home loan calculator make financial planning easier?
Easy to use
A home loan calculator is resourceful and easy to use. You can access this online tool on most lender websites. All you have to do is enter your loan amount, loan tenure, and the interest rate offered by the lender. And the calculator will show you the estimated EMI amount within seconds.
Besides, you can check different combinations to determine an EMI that fits your budget.
Determine the right tenure and loan amount
Your home loan tenure, interest rates, and the loan amount you apply for directly affect your EMI amount. While the interest rate is fixed by the lender and depends on various eligibility criteria, you have to choose the loan amount and repayment tenure.
You must settle on a loan amount based on your needs and affordability. It would help to create a budget to arrive at an affordable amount. Similarly, loan tenure directly impacts your EMI – the shorter the tenure, the higher your EMI.
So, you can use the online home loan calculator to determine how much you can afford to borrow and for how long. If you can easily manage higher EMIs, go for a shorter tenure. Otherwise, if you have too many financial obligations, it is best to choose a longer term to make the repayment affordable and avoid the risk of default.
Know the EMI beforehand
With a home loan calculator, you can estimate the EMI amount and the total interest outgo before the loan is sanctioned. This helps you to plan your monthly budget – you can decide if you need to cut down on expenses to manage the EMI payments better.
Not knowing your EMI obligations beforehand can significantly affect your finances; you might end up applying for a higher loan amount where the EMIs turn out to be higher than expected. This will not only make repayment difficult but late payments or defaults can also hurt your credit score.
Borrowers can compare loan offers
With different lenders offering competitive interest rates and attractive loan terms, choosing the right lender that fits your needs can get overwhelming. Apart from lower interest rates, flexible loan terms, and nominal charges, you must compare various lenders based on your prospective EMIs.
A loan calculator can help borrowers estimate the amount of EMIs they will have to pay with each lender, making it easier for them to choose a lender that offers the most affordable loan.
Manage loan prepayment
During your home loan tenure, there might be times when you receive some extra funds, maybe a cash bonus, or increased profits in business. In such a situation, you can consider prepaying a big chunk of your loan to reduce your liability substantially.
A home loan EMI calculator can help ascertain how the loan prepayment before the tenure can impact your remaining EMIs. You can calculate the new EMI for the remaining tenure and adjust your finances accordingly.
You can rely on an online home loan calculator to produce accurate results.
Final Words
When you’re looking to apply for a home loan, a home loan EMI calculator is a handy tool that assists your financial planning. Equipped with the right insights, your loan repayment will become much more manageable.
Check out Tata Capital Home Loans with the most competitive interest rates and a wide range of products. With flexible repayment tenure and structured EMI plans, you can get a quick loan starting from Rs. 5 lakhs. Use the home loan EMI calculator to plan your finances according to your loan needs.
