Have you recently made the decision to take a home loan to finance transforming your dream into reality? That is a major step into a financial commitment space, and you have probably looked at it from many angles.
The first thing that you looked at when considering a loan is the interest rate, and how to create a viable repayment schedule. Here, a crucial aspect is the EMI that you have to commit to paying so that you can repay the loan along with the interest calculated.
Before getting into the calculation process, it’s good to refresh your awareness on the EMI process.
What Is EMI?
EMI or Equated Monthly Instalments refers to the regular, fixed amounts that you must commit to paying your lender. These instalments include the principal that you borrow and the interest charged by the lender. Banks may also add on other charges such as a processing fee.
You have to commit to paying these instalments over a certain fixed period of time. This is unique to your home loan and your repayment capacity. Factors that affect the calculation of what your EMIs are include the principal amount that you borrow, interest rate levied and the tenure of the loan.
Before you select a particular loan plan, you can calculate the EMI schedule that’s most suited to you, using a home loan EMI calculator. This helps you to stay abreast of your financial planing and make the best, most informed decision.
What Is A Home Loan Calculator?
A home loan EMI calculator is a convenient, user-friendly, online tool. It uses standard mathematical formulae such as amortization, principal loan amount borrowed, interest rate levied (whether fixed or floating), the payment schedule and frequency and the term of the loan. It also helps you to check your eligibility for a certain EMI so that you can select the most convenient repayment schedule based on your unique circumstances.
The tool gives you accurate information on monthly payments that are categorized as principal vs interest, the total amount of the loan which includes the principal plus interest, what your monthly payments should be and when they are due.
This gives you the flexibility to compare and contrast a variety of loan schemes offered by different lenders.
What you have to do is input the interest, tenure and amount of the loan and you will get a complete table showing what your amortization schedule looks like.
Benefits Of The EMI Calculator
There are different types of home loan EMI calculators. These include the standard EMI calculation tool, and also other variants such as interest rate calculator, eligibility calculator, amortization calculator, and also tools that help you to understand prepayment and balance transfer.
For best results, experts suggest that you use as many of these variants as possible, so that you get a 360-degree view of your home loan.
The results provided by your home loan calculator helps you to feel more clear on what your commitment is, and you get the confidence knowing exactly how and when to fulfil the repayment terms.
The calculator provides you with a detailed breakdown of the financial charges that come with the loan, including the interest rates that you choose, and also any additional fees that are applicable. This means that there are no nasty surprises waiting for you down the line.
The calculator helps you to understand the best possible loan to choose so that it aligns with your present and near future financial situation.
It gives you a set of figures that you can use when you talk to your bank, and though there could be slight variations in the final loan amount, you get a clear understanding of what you have signed up for.