Buying a new home is always an exciting activity; however, it is not always hassle-free due to the pre-buying processes that one has to face. The fundamental requirement in any case of buying aa new home is nothing but the loan, which has to be figured out very accurately. Nowadays, several banks and financial institutions offer home loans at attractive interest rates, but, it is always necessary to find out whether the home loan EMI is affordable for you or not. Before proceeding further, let’s get hands on the basics of home loan EMI.
Home Loan EMI
The property values are going high along with the time, and one needs the home loan to own property unless he possesses a sizeable corpus. The banks offer you a loan for the new property you are willing to buy. Ultimately, as you repay the home loan, you also need to pay the interest on the overall principal amount. The repayment is usually made for a particular tenure and in terms of instalments. The phenomenon is called as Monthly Equated Instalments or EMI. The home loan EMIs have to be paid every month.
Earlier calculating the home loan, EMI was a hassle. Traditionally, a mathematical formula was used to calculate the home loan EMI as follows-
|EMI =||Principal Amount x Interest Rate x (1 + Interest Rate) Number of Years (Tenure)|
|(1 + Interest Rate) Number of Years (Tenure) – 1|
Since, the formula seems to be quite confusing, a tool for calculating home loan EMI was needed. Here, the banks and financial institutions introduced a toolkit which lets you get away from this hassle of figuring manually and offers you results in a few seconds. The kit is nothing but the home loan EMI calculator.
Working of Home Loan EMI Calculator
Home loan EMI calculator is an easy-to-use tool, available online. The banks and financial institutions have their websites that offer home loan EMI calculators; besides, the third-party sites are known as aggregators also provide the same. The calculators provide you with a clear picture of what you have and what will you have to do to get the home loan. With the use of the toolkit, you get an exact idea of your home loan EMIs, the tenure, and the overall interest rate. Entirely, the process helps you in budgeting and determining the financial requirements for your new property.
Working of Home Loan EMI Calculator
The home loan EMI calculator works based on a few factors such as the principal amount, interest rate, and the tenure of the loan. Besides, these factors are furthermore dependant on several things such as the income status of the individual. The loan amount may vary based on whether you are self-employed, salaried, or a businessman. Also, other factors such as your age, monthly income, the total number of dependants on you, the income of your co-applicants (if any), assets, other liabilities, and overall savings records.
To use the home loan EMI calculator, you need to follow a few simple steps. The user interface of the calculators is straightforward and showcases limited tabs. Usually, you will find sliders above the key parameters such as Principal amount, duration, and rate of interest. You can use the slider to define the amount. A box will be given above each slider that shows the exact figure of the parameter. The loan tenure is usually measured in months. You can change the sliders for each parameter to get different quotes and various loan amounts for different tenures. As you re-adjust any of the sliders, the home loan EMI will be calculated promptly.
In such ways, you can calculate home loan EMIs for your new property. The interest rates may vary from bank to bank. Thus, do thorough research on which bank is offering most economic interest rates and make a wise decision by opting for a right quote. To conclude, calculating home loan EMI is just a matter of few seconds; thus, do it now!