A home loan calculator is a simple online tool that helps home buyers to plan their housing loan efficiently. Additionally, using an online home loan EMI calculator is simple and free of cost and provides users with instant accurate results. Here are some ways in which an online EMI calculator helps borrowers in planning finances.
Use of home loan calculator during financial planning
Following are some of the notable uses of a home loan calculator, helping potential borrowers in strategic planning of their finances:
- Determining the appropriate loan amount: Using this online calculator, home buyers can determine the amount that they should apply for, based on their repayment capability.
- Planning schedule for comfortable repayment: With an online EMI calculator, applicants can determine the right tenor for the loan. This ensures they can easily pay off their credit.
- Framing monthly budget to pay instalments: Applicants can plan their monthly budget even before applying for their credit to check if it is feasible for them to pay the EMIs on time.
- Devising strategies to save more on EMIs: Applicants can save more on EMIs by employing strategies such as negotiating with the lender and comparing options among various lenders to choose the best one, among other methods.
- Planning house loan pre-payments: When calculating EMIs, online home loan calculators also provide a loan amortisation schedule. This helps borrowers to plan their pre-payment and save more on interest.
There are some easy steps that you can follow to use this calculator and plan your finances.
Steps to use a home loan EMI calculator
You can follow the steps mentioned below to use an online home loan EMI calculator:
Step 1: Navigate to the official website of a financial institution.
Step 2: Move to the home loan EMI calculator page.
Step 3: Enter the loan amount, tenor and interest rates.
Once done, the payable monthly instalments will automatically appear on the screen. However, there are some mistakes that borrowers often make when calculating EMIs, resulting in incorrect values.
Mistakes to avoid when using a home loan EMI calculator
Here are some common mistakes that borrowers should avoid when using an online home loan EMI calculator:
- Entering inaccurate data: Even missing out on a digit, changing a digit or altering the position of a decimal can lead to significant errors.
- Not comparing among lenders: Borrowers can easily compare among the reputed lenders and choose the one offering the best home loan in the market.
- Not considering extra costs: When calculating the cost of home loans, borrowers should also consider processing fees and other additional costs.
Also, they should know about the factors affecting monthly instalments so they can optimise them to make their loan affordable.
Factors affecting home loan EMI
Following are some factors that affect the EMIs of a housing loan:
- Principal amount: Choosing a lower principal amount subsequently reduces the monthly instalments of a home loan.
- Repayment tenor: A longer tenor implies more time for credit repayment, attracting lower EMIs on housing loans.
- Interest rate: Lower home loan interest rate ensures that borrowers will have to pay fewer monthly instalments to pay off their credit.
One can easily optimise these factors to choose a perfect monthly instalment of their loan, based on their repayment capacity.
Tips to reduce home loan EMI for new borrowers
Following are some tips for new borrowers to reduce their home loan interest rate:
- Not requesting an excess amount: Borrowers should request only the amount that they will need to purchase a home to pay affordable EMIs.
- Selecting long repayment tenor: Longer loan repayment tenure reduces the monthly instalments helping borrowers to pay them on time.
- Making a large down payment: A large down payment notably reduces the costs of loans, helping borrowers to pay EMIs easily.
- Choosing the best lender available: One can compare among the lenders and select the one offering the most affordable home loan.
There are several reputed financial institutions that provide exclusive pre-approved offers to existing borrowers. They can check these offers by logging in to the official websites of the financial institution and entering a few necessary details. Availing this offer hastens the approval process of credit like home loans, loans against property, and more.
Home loan calculator saves borrowers from manual calculations that are not only time-consuming but also prone to errors. So, borrowers can use this online tool to easily plan their finances, when applying for a home loan.