With the economy steadily righting itself after the slowdown in 2020, there has been an upsurge in demand for purchasing homes in India. Housing loan applications have increased by 25% to 40% across all the country’s major cities.
With an increase in demand for home loans, individuals need to check interest rates of competing financial institutions to avail the best deals. In this regard, there is no better tool than a housing loan EMI calculator for potential buyers who need to conduct adequate research before availing a home loan.
What is a home loan EMI?
Home loan EMI or Equated Monthly Instalment is a fixed amount that a borrower must repay each month within a stipulated tenor. An EMI has two components – principal and interest amount. The first EMI repaid has a higher interest component and a lower principal. In subsequent repayments, the interest component keeps reducing.
How is the EMI of a housing loan calculated?
An EMI calculator for home loans can be used to compute the value and number of EMIs. An individual can also calculate his/her EMIs using the following formula –
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
Where P is the principal amount borrowed,
R is the home loan interest rate,
And N is the number of monthly instalments to be paid.
What is a housing loan EMI calculator?
A home loan EMI calculator is a tool used to compute the EMI of home loans. This online easy-to-use tool helps in financial planning so that individuals can assess their repayment capabilities before availing a loan.
It also gives an accurate idea about which financial institutions provide the best home loan interest rate. Based on a few details, the calculator gives accurate information about the cost and number of instalments to be paid, interest rates, payment schedule and breakup of the total payment.
Basic information about the EMI calculator
The EMI calculator gives the following components –
- Home loan EMI – Amount that the borrower is liable to pay every month to the lender until the tenor ends.
- Payment breakup – A breakdown of the total payment is provided, informing the user about the interest rates and the principal amount.
- Amortisation schedule – The home loan amortisation schedule is a table or record with the information of all periodic payments of your housing loan. It gives a break up of the interest and principal components in EMIs after each monthly repayment is made.
Calculating the monthly instalments on the advance is very easy with the housing loan EMI calculator. All a borrower would need to do is enter the loan amount he/she intends to avail, the tenor (in months) and the rate of interest in the required fields.
Benefits of using an EMI calculator for home loan
An EMI calculator gives a clear understanding of interest rates, number of EMIs, tenor and a payment breakdown of the loan. Such detailed information in one place helps the potential borrower conduct thorough financial planning that can prevent any monetary stress later on.
EMI calculators offered by financial institutions give a complete breakdown of home loan fees and charges. This ensures that a borrower has complete information to aid in their decision-making process.
Financial institutions offer home loan eligibility calculators alongside EMI calculators on their websites. These help you know about all factors that can affect eligibility criteria so that you can be fully prepared before applying for a home loan.
Financial institutions also bring pre-approved offers that can help expedite the loan application process. These offers are available for various financial products such as home loans, loans against property, etc. You can check your pre-approved offer easily by entering your name and phone number.
A housing loan EMI calculator makes it easy and convenient to calculate one’s repayment liability. Instead of tedious manual calculations, individuals can enjoy accurate and detailed information with just three inputs.