Calculating Your Way to Financial Freedom: Home Loan EMI Calculator Explained

A home loan is a commitment that easily lasts a few decades. Thus, borrowers must avail of these loans after thorough research and careful planning. Home loan applicants must use a home loan EMI calculator to become informed about their EMI obligation and affirm that they are borrowing the right amount and will be able to repay the loan without feeling burdened.

A home loan EMI calculator is an online tool that borrowers can use to figure out their EMIs for their desired combination of the loan amount they wish to borrow, the loan tenor they wish to opt for, and the rate of interest they are being offered. The calculator has a user-friendly interface. It has three sliders using which the home loan applicant can input their desired loan amount, the tenor that they think will work best for them, and the rate of interest that their chosen lender is willing to offer them. Borrowers can also directly input these values into the boxes underneath the sliders. Once a user enters these values, the home loan EMI calculator does not only give them their home loan EMIs but also their interest outgo for the loan. Some calculators also give borrowers an ammoritization schedule that they can use to understand what part of their home loan EMI will go towards covering the principal component and what part will go towards covering the principal component.

A home loan EMI calculator is a highly beneficial tool that all home loan applicants and borrowers must use to help them with financial planning and ease the burden of home loan repayment. Let us look at some of the benefits of a home loan EMI calculator.

Benefits of a Home Loan EMI Calculator and Why You Must Use One

1. The biggest benefit of a home loan EMI calculator is that it helps you take the right decisions regarding your home loan. To start with, using a home loan EMI calculator, borrowers can compare offers from different lenders and understand how the rate of interest being offered by each lender will affect one's monthly EMIs as well as one's total interest outgo and the net cost of borrowing the loan. Thus, a home loan EMI calculator helps borrowers decide the right or the most lucrative loan offer for them.

2. The home loan EMI calculator gives borrowers their EMIs for their preferred combination of loan amount and loan tenor and the best rate of interest being offered to them. By looking at the EMI figure, borrowers can decide easily if they can afford the loan EMIs and therefore, the loan they wish to avail of. If they think that the EMI figure is too high, they can change the loan value or the tenor to arrive at a loan EMI that they will be able to easily repay. Thus, a home loan EMI calculator also helps borrowers decide the right loan amount and loan tenor for them.

3. The home loan EMI calculator also helps with home loan repayment planning. Once a borrower knows their EMIs, they can plan their monthly budget in such a way that they always have enough money at the end of the month to take care of their EMI obligation. In case a borrower finds that their EMIs are higher than expected, they can rework their monthly budget, remove all unnecessary expenses and make sure they are left with enough money to cover their EMIs. When a home loan borrower borrows what they can repay, repayment becomes easier. Further, not only does proper planning simplify the burden of home loan repayment but also saves borrowers from late fees and penalties.

4. Home loan prepayment refers to the process of prepaying a part of one's loan. Home loan foreclosure, on the other hand, refers to the process of paying off one's entire loan in one go. Individual borrowers on floating interest rates can prepay or foreclose their loans at any given time without paying any penalty. This is however not the case for borrowers on fixed interest rates. Borrowers on fixed interest rates must pay a penalty. Whether you are paying a penalty or not, it is crucial you choose the right time for home loan prepayment or foreclosure to maximize savings. A home loan EMI calculator can help a borrower understand what would be the ideal time for prepayment or foreclosure and if you are opting for prepayments, how will they affect your monthly EMIs or the loan tenor.

5. Lastly, if you are planning to opt for a home loan balance transfer, by looking at the amortization schedule that the home loan EMI calculator provides, you can easily figure out what would be the ideal time to opt for a home loan balance transfer.

Final Words

A home loan EMI calculator is a highly beneficial tool that can help a borrower in many ways. These calculators are easily available online and are also easy to use. Further, they can be trusted for accuracy and they help home loan borrowers save time. The calculations that a home loan EMI calculator does can also be done manually but manual calculations are prone to errors. Further, they are also a waste of time. In conclusion, all home loan applicants must use these calculators to plan their home loan journey in a better way and make home loan repayment entirely stress-free.waste