Applying for a home loan is a big financial commitment – usually lasting decades. A home loan allows buyers to finance their purchase without draining their savings or jeopardizing their dream home. However, there is more to planning your home loan than just choosing the right home loan provider.
It involves a lot of financial and budgetary planning, from selecting a property that fits your budget to deciding on an affordable loan amount accordingly. And choosing an appropriate loan term and planning your IMEs is part of that. Why? Because before opting for a loan, you must know how much you can afford to pay as an EMI in order to more easily plan your monthly budget with precision.
Using a home loan calculator is an easy way to estimate your EMIs. This is a free online tool that allows you to calculate your monthly EMIs using three key factors:
The principal amount
term of the loan
Interest rate
Borrowers can enter various combinations of loan amount and term to arrive at an EMI amount that works best for them. It is an excellent money management tool that allows borrowers to easily plan their repayments.
How can a home loan calculator help with financial planning?
Easy to use
A home loan calculator is ingenious and easy to use. You can access this tool online at most lenders’ websites. All you have to do is enter your loan amount, loan term and interest rate offered by the lender. And the calculator will show you the estimated EMI amount in seconds.
Also, you can check out different combinations to determine an EMI that fits your budget.
Determine the right tenure and loan amount
The term of your home loan, interest rates, and the loan amount you apply for directly affect the amount of your EMI. While the interest rate is set by the lender and depends on various eligibility criteria, you have to choose the loan amount and repayment term.
You have to settle a loan amount according to your needs and financial capacity. It would be helpful to create a budget to arrive at an affordable amount. Likewise, the term of the loan has a direct impact on your EMI – the shorter the term, the higher your EMI.
So you can use the online home loan calculator to figure out how much you can afford to borrow and for how long. If you can easily handle higher EMIs, go for a shorter term. Otherwise, if you have too many financial obligations, it is better to choose a longer term to make repayment affordable and avoid the risk of non-payment.
Know the NDE in advance
With a home loan calculator, you can estimate the amount of EMI and total interest spent before the loan is sanctioned. It helps you plan your monthly budget – you can decide if you need to cut expenses to better manage EMI payments.
Not knowing your EMI obligations in advance can significantly affect your finances; you might end up asking for a higher loan amount when the EMIs turn out to be higher than expected. Not only will this make repayment difficult, but late payments or defaults can also hurt your credit score.
Borrowers can compare loan offers
With different lenders offering competitive interest rates and attractive loan terms, choosing the right lender that meets your needs can become overwhelming. Along with lower interest rates, flexible loan terms, and nominal fees, you should compare different lenders based on your potential EMIs.
A loan calculator can help borrowers estimate the amount of EMI they will need to pay with each lender, making it easier for them to choose a lender that offers the most affordable loan.
Manage loan prepayment
During the term of your home loan, you may receive additional funds, perhaps a cash bonus or increased profits from your business. In such a situation, you may consider prepaying a large portion of your loan to significantly reduce your liability.
A home loan EMI calculator can help determine the impact of prepaying the loan before the term of office on your remaining EMIs. You can calculate the new EMI for the remaining term and adjust your finances accordingly.
You can rely on an online home loan calculator to produce accurate results.
Last words
When looking to apply for a home loan, a home loan EMI calculator is a handy tool to help with your financial planning. Equipped with the right information, your loan repayment will become much more manageable.
Discover Tata Capital home loans with the most competitive interest rates and a wide range of products. With a flexible repayment term and structured EMI plans, you can get a quick loan from Rs. 5,000,000. Use the home loan EMI calculator to plan your finances according to your loan needs.