Make the Best Use of Home Loan EMI Calculator

Applying for a Home Loan is a significant choice in anyone’s life that can have a long-term financial impact. As a result, it's critical to understand all of its features and to find a loan that is completely aligned with your Financial goals. Acceptance of the fact that a predetermined percentage of your Income will be used to make equivalent monthly instalments or EMI payments for many years is a major part of taking a home loan.

In this article, you’ll learn about the housing loan emi calculator to understand the nature of your EMIs, how to use one, and the many advantages of utilising one so as to make your decision of taking a home loan easier.

What is Home Loan EMI?

Home Loan is the loan taken from any financial Institution for buying a home. Owning a home is a desire, hence, the home loan is one of the biggest and most sought out loans in the present scenario. Since the value of the property goes on increasing, so owning a home is a very good idea both from an owner view as well as from an investors view. To fulfill the same in an easy way you have Home loan option available with banks. Home loan, usually taken is a big amount, for a longer period of time, upon which certain percentage of interest is levied. So a well planned EMI calculator is an important tool which will ease all your doubts within seconds. It consists of 3 input fields, mainly Loan Amount, Loan Tenure, and Interest Rate. It is as simple as that, once you fill in the details you will be given how much EMI (Equal Monthly Installment), you need to give to the Bank every month, in order to repay the loan to the Bank.

Formula for calculating EMI

You can calculate your EMI Amount with the help of the mathematical formula:

EMI Amount = [P x R x (1+R)^N]/[(1+R)^N-1]

Where,

• P - Principal Amount
• R - Rate of Interest
• N - Tenure

Let’s take an example to showcase how this calculator calculates the monthly instalments.

Mr Shah borrowed a home loan amount of ₹ 40,00,000 from a reputed bank. The rate of interest associated with the loan stands at 7.5% p.a. The tenure of the loan is 240 months or, say, 20 years.

In this case,

• Principal amount = 40,00,000
• Interest Rate = 7.5% p.a
• Tenure = 20 years

EMI = [4000000 x 7.5 x (1+7.5)^20]/[(1+7.5)^20-1]

Total monthly EMI counts to ₹ 32,224 and total interest payable counts to ₹ 37,33,622.

Principal Loan Amount: This is the original amount lent to you by the bank/lender. The loan amount will depend on your need and the purpose of the loan. Higher the loan amount, the higher will be the EMI that you pay for the loan taken. Tenure: The tenure of a loan refers to the total time period given for the repayment of the loan. Since the repayment is done every month, the tenure is calculated in months and not years. So, a tenure of 2 years is equal to 24 months, and so on. The rate of Interest: This is the rate at which interest is charged on the principal loan amount. The interest rate varies according to the type of loan taken and the lender (bank) from which you are taking the loan. The rate of interest has a direct bearing on your EMI amount; hence, it is important to compare interest rates across banks before opting for a loan.

Factors Affecting Home Loan EMI

In order to ensure the repayment option is in favour of your situation, it is important to ascertain the factors which are going to affect the number of your monthly instalments. So, here is the list of the factors to double-check to make your repayment easy and smooth.

Principal Amount

This is the amount that you are going to borrow from the institution as a loan. It is directly proportional to EMIs, which means the higher the principal amount, the higher will be the EMIs and vice versa.

Tenure

The time taken to repay the loan amount along with interest is termed as tenure or loan period. It is inversely proportional to EMIs, which means the lower the tenure, the higher will be the EMIs and vice versa.

Rate of Interest

When you borrow the amount, they charge you a certain amount upon the borrowed money. Interest rate is directly proportional to EMIs, which means the higher the interest rate, the higher will be the EMIs and vice versa.

Prepayments

Making prepayments on your loan helps you lower the amount owed on your loan. As a result, your interest rates are reduced. Both of them help to reduce the EMIs.

Processing Fees

It is referred to the cost charged by the bank for processing your loan application. This sum is either a % of your loan amount or the lender's set minimum or maximum charge. The loan documents determine how much money you can get as a loan. Even if your application is denied, this fee is mandatory to pay or as applicable by the lender.

Apart from this, other importance factors mentioned below play a huge role in deciding the amount of home loan:

• Salaried, Self- Employed Professional or a Businessman
• Income
• Age
• Qualifications
• Number of dependants
• Co-Applicants Income
• Assets, Liabilities, Stability, and Continuity of Occupation of the borrower
• Savings History

Further, the loan eligibility will also be dependent on the value of property selected by you.

Benefits of Home Loan EMI Calculator

Now that you know about the housing loan EMI calculator and the formula, let's look at why you should use this calculator before applying for a loan. Here is a compiled list of advantages of using an EMI calculator for a house loan.

1. Simple to use

Manually calculating EMIs is both difficult and time-consuming. There's a good chance you'll make a calculating error. You can receive precise answers quickly, in a matter of seconds, using the house loan EMI calculator. You may keep putting in different combinations of interest rates and tenures, and the computation will always be correct.

2. Accurate break-up of associated charges

This tool will assist you in comprehending the financial expenses associated with your EMI, such as the total interest payable and the processing fee value. Knowing the real value might help to comprehend the exact cost of the loan since banks and financial institutions provide them as a % of the loan amount.

3. Comparison of different loan offers

Every lender has a different interest rate to offer on their loans. With calculators, you can compare loan offers from different banks. The entire cost of each loan, as well as their EMIs, will be displayed in the results. This will help you in determining which choice is the most feasible.

4. Management of finances

As the EMI calculator allows you to enter various interest rates and loan terms, you can estimate the monthly EMIs you'll be paying on loan and plan your expenses accordingly from the budget set.

5. Management of other loans

The majority of individuals pay EMIs for multiple loans at the same time. When you add another loan to your existing ones, the calculator will alert you to your financial position to make the decision accordingly. In case you have some additional cash available to make prepayments while paying your EMIs. The Home Loan EMI calculator will assist you in reviewing your financials and determining how prepayments can help you pay off the loan before the term expires.

6. Selecting the right tenure

By calculating the EMI, you can select the right tenure to pay off your loan. If you can afford to pay high EMIs, you can pick a shorter loan duration and pay off your loan sooner. If not, you can pay a more manageable EMI and prolong the term of your loan.

7. No charges

With this online tool, you get an opportunity to make use as many times as you want without paying an extra buck from your pocket.

Home Loan Eligibility Calculator

The home loan eligibility calculator is an online tool for determining whether an individual is eligible to avail of a home loan or not. It is determined by a variety of variables, including monthly income, current age, Credit Score, fixed monthly financial commitments, credit history, and retirement age.

All banks and Non-Banking Financial Institutions (NBFCs) have identical eligibility standards for home loans. However, depending on the needs of each lender, there may be unique conditions that apply to them. Understanding the requirements that must be met in order to qualify for a home loan can make the application process go more smoothly and efficiently for you.

Comparison Chart of Different Banks’ Home Loan EMI Calculation

In the below table, you can get a comparison of #EMI (per lakh) at the interest rate charged by the mentioned banks for a tenure of 20 years.

SBI Home Loan Calculator

Interest rates for SBI house loans begin at 6.7% per year. Flexible duration, no prepayment penalty, and no processing costs are just some of the advantages of a State Bank of India home loan. SBI house loans can be used to build, extend, repair, or renovate an existing home.

The SBI home loan EMI Calculator estimates the EMI based on the amount you want to borrow, the duration of the loan, and the current SBI home loan rate of interest. It differs from one scheme to another and is based on a variety of criteria such as your credit score, repayment capacity, and so on.

HDFC Home Loan Calculator

On behalf of HDFC Ltd., the bank provides home loans. The interest rate on an HDFC house loan starts at 6.75% per annum, with EMIs starting at Rs. 649 per lakh. The bank can finance up to 90% of the property's worth, which the borrower can return over a flexible 30-year period.

The HDFC Home Loan EMI Calculator allows users to estimate the monthly loan payments they would have to pay to service their HDFC home loans. The eligibility conditions for HDFC housing loans differ from one scheme to another. HDFC Ltd. determines a customer's eligibility for a home loan by evaluating their repayment capacity based on their income, age, educational qualifications, credit history, number of dependents, spouse's income (if any), assets, Current Liabilities, job or business stability, business or job continuity, and other factors.

Top Funds for 2024

The Bottom Line

Banks and other financial institutions are currently Offering multi-year low-interest rates on home loans. You can take a home loan at a rate of approximately 7% if you have a Good Credit score. Given the lack of appreciation in Real Estate prices over the previous few years, now would be the perfect time for renters to buy a property.

However, there are a few things to keep in mind before taking out a home loan, such as the capability to pay back, rate of interest, tax benefits, prepayment policy, charges and so on. And boom, you are all set to buy your new home.