How to Use the Online Calculator to Check your Home Loan Affordability?

According to recent studies, the real estate industry has attained around 11.2% growth from the fiscal year 2015 to 2020. This proves the fact that more people are keen to invest in housing properties, especially with several offers and schemes launched by the Government.

Affordable housing facilities have made it possible to purchase your dream house or spend a large amount to renovate it. Regardless of that, one may still need to opt for home loans in order to execute such plans. But since there are so many financial institutions who are offering different types of interest rates, it becomes necessary to use a home loan calculator to check your monthly instalments beforehand. 

Purpose of using a home loan EMI calculator

In order to maintain a long term commitment like home loans, you need to be prepared with that particular amount that you will be paying as equated monthly instalment. It is a known fact that credit score determines home loan EMIs and skipping monthly instalments can make a negative impact on this score. This makes it easier for you to scan your expenditure and decide whether bearing those monthly instalments will be possible or not. 

A home loan interest calculator properly calculates the monthly EMIs and keeps you prepared for all the upcoming liabilities for that specific loan amount. 

What does a home loan calculator provide?

There are several benefits of calculating EMIs before taking a home loan which includes planning out the repayment process, deciding how much amount to borrow, etc. Being an essential tool for borrowers to be aware of their liabilities before they actually go for a home loan, this EMI calculator provides some important insight.

  • EMI amount: One can get a clear idea of the equated monthly instalment he or she has to pay against that loan amount. 
  • The break-up: You can see the interest portion in each month’s EMI and the remaining amount that is to be repaid every month. 
  • Amortisation schedule: Borrowers get to see the break-up of both the interest amount and principal amount that has been paid out of your every month’s EMI till the end of the tenure. Here you also get to see the outstanding balance that is yet to be paid after the previous EMIs. You can even download this document to get a clear understanding and check later.

A housing loan EMI calculator makes it convenient for borrowers to assess further charges so that they can maintain their expenses accordingly. As interest rates often vary depending on the financial institution or the type of loan you are choosing, using such tools come in useful. 

How to use the online house loan calculator?

Using a home loan calculator is easy and hassle-free. In order to check your EMI amount, all you need to do is to input the loan amount which needs to be in between Rs.50 thousand and Rs.1 crore. Along with that, you also need to provide the loan tenure you will be choosing for the home loan and the interest rate as well. 

Using the slider, one can provide different loan amount or tenure to check the EMI and eventually come to a conclusion. 

The formula of home loan calculator used to check monthly instalments is-

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

Here, P stands for Principal loan amount, n stands for number of monthly instalments and R stands for the rate of interest. 

Availing a home loan should be decided on the basis of your regular expenditure, your income and some other parameters associated with your lifestyle. However, with some useful schemes like PMAY and attractive offers, one can easily opt for such loan amounts. 

Even top financial institutions and NBFCs are providing pre-approved offers to make financing hassle-free and less time-consuming. These offers are available on financial products such as home loans, loan against property, etc. You can easily check your pre-approved offer by submitting a few details like name and contact number. 

While there are several offers to help the citizens to experience affordable housing facilities, one should also look for a better home loan interest rate to save money. A home loan calculator assists you to get the best deal for your dream house without keeping you burdened with high interest rates. 

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