A home loan calculator is going to help in calculating the loan installments or the Equated Monthly Installments (EMI). This is the amount which has to be paid to the bank until the loan amount is completely paid off.
The EMI that one has to pay to the bank each month depends on a number of factors like home loan amount, tenure of the loan and the rate of interest charged by the bank. It is one of the best financial planning tools which a person could wish to use while purchasing a home.
Key features of home loan calculators
There are certain features of a home loan calculator which makes it a favorable tool:
- Provides Comparative Analysis: With the help of this tool, one can easily compare the various loan schemes that are offered by various banks and calculate how much they can save by opting for a particular bank, as opposed to another.
- Multiple Options to choose from: It is one of the most convenient ways to find the total mortgage cost and the loan applicant should be able to enter different loan amounts, tenures and rates of interest to assess how much they would end up paying in the long run and which is the most convenient option.
- Repayment Options: Repaying the loan amount is the foremost issue of owning a house and this can be easily calculated by entering various tenures and interest rates to understand how long it would be until the loan is completely repaid.
- Customized calculations: It would be possible for the applicant to get customized calculations by checking various amortization periods for different loan amounts, interest rates and tenures. The breaking up of the sum month wise can help one to create a clear financial picture.
- Handy and Quick: Home loan calculators are easy to use and something that one can calculate in very little time and from anywhere. Just a few information, and you are sure to get a detailed breakdown of your EMIs and total expenditure.
- Helps in Better Understanding of the Product: With the home loan calculators one does not have to rely on third parties to opt for a home loan or rely on agents. One can research the various loan products for themselves and choose which the best one for them is.
- Highest Customer Satisfaction: Home loan calculators are used by various banks and financial institutions as well as individuals to make the home loan processing more convenient and transparent and banks have also been able to attract more customers this way.
How is the Home Loan Calculator Used?
While using a Home Loan Calculator to calculate monthly EMIs, certain data has to be fed into the calculator.
- The first of these is the Loan Amount, which should be between INR 50,000 to 1 crore.
- Next is the tenure of the Loan and this should be between 1 year and 30 years.
- Lastly, the Rate of Interest, which is charged by the bank and this is between 1 percent to 50%, depending on the bank on financial institution one is opting for.
A formula is used to calculate the home loan EMI and this is:
EMI= [ P x R x (1+R) ^n] / [(1+R)^ n-1] where
P= Principal Loan Amount
R = Rate of Interest
N= Number of Monthly Installments
The calculator will show the following results:
- The EMI: This is the amount which has to be paid each month by the borrower till the loan is completely repaid.
- The Break- up: This will display the rate of interest in portions in each month’s EMI, and the principal in that amount.
- The Amortization Schedule: This will display the break up according to the schedule, showing how much of the principal is paid out of the EMIs till the tenure is over. It has to be noted that the principal amount percentage is very low in the initial EMIs and it is only towards the latter half of the tenure that the percentage of principal in the EMIs start to increase.
You can even check your eligibility for the home loan as displayed in the image below:
Here are some points which a home loan borrower needs to keep in mind:
- What is a home loan calculator? It is a financial planning tool, developed for the calculation of loan installments that has to be repaid to the bank till the home loan is completely paid off.
- What is Amortization? Amortization is the break-up of the interest and principal amount which is paid to the bank over a given period.
- Can one apply for a joint property loan? Yes, that may be done but it depends on the nature of relationship with the applicant.
- Are home loan calculators accurate? The results of the calculator differ on the inputs and data one provides in the calculator. It also depends on the interest rate. If this information are provided correctly, then the results are accurate.
Process of Using Simplified Further
Visit https://www.squarecapital.co.in/tools/emi-chart and then fill up the fields as given below:
Thereafter, what you will get is the complete home loan EMI calculator and the break-up of the payment.
This will give you an idea of the principal and interest that are payable along with the overall payment to be made to the lender. Thereafter, you can also view the entire payment schedule for the home loan as given below:
Today, youngsters are realizing their dream of buying their own house very early in life and this is largely due to good financial planning and the home loan calculator is a great tool to assist with that.