While taking a home loan, a borrower must keep in mind the affordability of EMI payments. EMI is equated monthly instalments that a borrower pays every month over the loan tenor. If a borrower misses any EMI payment then they will need to pay additional interest charges and also damage their credit score. Therefore, the first question that comes to mind while taking a loan is how to EMI calculator.
What is an EMI calculator?
While taking a loan, it is critical to ensure that the entire procedure goes smoothly. For a first-time loan taker, calculating EMI, checking the loan amount and loan interest rates, and selecting the loan tenure can be overwhelming; this is where an EMI calculator helps.
An EMI calculator is an online tool that allows a borrower to check the EMI they will have to pay each month. Furthermore, this tool also shows the total interest amount.
In an online home loan EMI calculator, a loan borrower will need to enter the principal borrowed amount, the time period within which he or she will repay the loan and the home loan interest rate. Within a blink of an eye, the calculator will generate the result. One will be able to change the amounts, tenor and interest rate to get new results, as many times as they want, according to their choice.
How to calculate EMI
There is a simple formula for quick calculations of Home loans.
EMI = [Principal amount x Rate of interest x (1+Rate of interest)^Loan tenor]/[(1+Rate of interest)^ (loan tenor in months-1)].
For instance, if someone is taking a loan of Rs. 40,00,000 for 10 years or 120 months with an interest rate of 7% the EMI will be-
EMI = [40,00,000 x 7 x (1+7)^120]/[(1+7)^ (120-1)] = 46,443
Advantages of housing loan EMI calculator
After knowing how to calculate EMI, the next thing a borrower should know is that what the advantages of a home loan EMI calculator are.
- When one is calculating an EMI payment, one cannot go wrong with any numbers. Here with a click of a mouse, one can get accurate results in a second.
- Furthermore, an online loan EMI calculator saves a lot of time for the user.
- While borrowing a home loan one must look into all the options and offers. An online loan EMI calculator allows the user to compare the EMIs by changing the tenor, interest rates and principal loan amount.
- As it is an online calculator one can use it anytime anywhere.
- The best part of using an online EMI calculator is that one does not need to insert any of his or her personal details on the website.
How does calculating EMI help while purchasing a home
EMI calculation helps borrowers with their financial planning. If a borrower already knows the amount they will be paying each month, then they will be in a better position to plan their monthly expenses accordingly. Also, an online calculator helps the borrower to compare and pick the right tenor.
Several reputed financial institutions extend pre-approved offers on different credit instruments like loan against property and home loans. These offers fasten the whole loan application procedure. Eligible candidates can check their pre-approved offers by providing a few details on the lender’s website.
For a loan lender, choosing an interest rate and lending the principal amount depends on the current repo rate. For a borrower choosing the right tenor, interest rate and principal amount can be tough. An online home loan calculator can help solve most queries regarding a home loan.