Are you considering buying a property with the backing of a home loan? If this is the case, it is advisable to assess your home loan EMIs before signing on the dotted line. One can figure out one’s EMIs with the use of a tool called the home loan EMI calculator.
EMI refers to the monthly payments required in exchange for bank and financial institution loans. With the online EMI calculator, you can simply calculate your EMI.
Benefits of Using a Home Loan EMI Calculator
The EMI calculator for house loans offers several advantages. This valuable online tool can assist you in carefully planning your home financing. If you are unsure of why you must use a home loan EMI calculator to assess your EMI, consider the advantages of the EMI calculator discussed below.
Convenient and Simple
When it comes to home loan planning, the statistics never lie. Using a housing loan EMI calculator to understand what you are getting into is easy and simple.
Zero Errors
Calculations performed manually are prone to errors. The housing loan EMI calculator eliminates this issue by consistently providing accurate results.
Fast Calculations
Calculating your loan EMI using a pen and paper will take hours. However, with the EMI online calculator, these calculations may be performed with a single mouse click.
Beneficial for debt management
When consumers make EMI payments, they occasionally have surplus funds available to prepay. If a customer wants to prepay some amount, the housing loan EMI calculator can assist in determining how prepayment will assist in repaying the loan before the deadline.
Better Financial Planning
If you use the EMI calculator and plan your finances well, you will easily be able to avoid all kinds of financial hurdles.
Comparing Loan Offers
Customers might use a loan calculator to evaluate loan offers from several institutions. The findings include the overall cost of borrowing as well as the EMI for each loan. This assists clients in narrowing down their best selections and selecting a loan that fits their unique circumstances.
Improves In Efficient Financing
Knowing your housing loan interest rate and EMI in advance will help you budget more efficiently and obtain a loan amount that fits your budget.
No Personal Information is Required
One need not have security concerns when using a home loan EMI calculator because one is not required to expose their identity to use the calculator. This, in turn, makes the calculator safe to use.
Formula Used in Calculation
The following numerical equation can be used to determine the EMI amount:
EMI Amount = [P x R x (1+R)^N]/[(1+R)^N-1],
where P, R, and N are variables, implying that the EMI value will change when any of the three elements is changed.
Here,
- P denotes the ‘Principal Amount.’ The main sum is the initial loan amount provided by the bank, upon which the premium is calculated.
- R denotes the bank’s ‘Interest Rate.’
- N denotes the ‘Age of the Loan.’ Due to the fact that EMIs are paid monthly, the period is expressed in months.
You can manually calculate the home loan EMI using the formula given above. However, manual computations are not only time-consuming but also tedious. You don’t have to spend a lot of time on these laborious calculations using an online home loan calculator. By simply inputting values in the appropriate fields, the EMI loan calculator provides fast results.
Why Calculate Floating Rate EMI?
Calculate EMIs using two opposed scenarios: optimistic (deflationary) and pessimistic (inflationary). You choose the loan amount and term, two components of the EMI. However, banks and HFCs set interest rates based on RBI rates. As a borrower, you should compute your EMI using the interest rate’s two extremes.
- Optimistic (deflationary) scenario: Assume the interest rate drops by 1%-3%. Calculate your EMI in this case. In this case, you can reduce your EMI or shorten the loan term.
- Pessimistic (inflationary) scenario: Assume the interest rate is raised by 1%-3%. Would it be possible for you to keep paying the EMI? Even a 2% increase in interest rate can result in a considerable increase in monthly payments.
Summing Up
Home Loan EMI Calculators are beneficial for future planning. A loan is a financial commitment that runs over a long period, usually years and decades. The calculator will provide you with immediate and precise results, allowing you to tailor your home loan to your specific needs and arrive at an amount that is affordable for you.