Home loan rates have fallen over the past year or so due to India’s ongoing liquidity crisis. A report suggests that as of January 29, 2021, the total outstanding home loan were worth close to Rs.14.18 trillion. With this ever-increasing demand for affordable credit, individuals must also do their part to become responsible borrowers. The first step to achieving that is to utilise a home loan interest calculator.
Understanding a home loan EMI calculator
A home loan is a long-term financial commitment whose repayment tenor can last for up to 20 years. When opting for such a credit, it is crucial for borrowers to assess the EMIs and the total interest they are liable to pay. While one can do this through manual calculations, these tend to be complicated.
Instead, using a home loan EMI calculator to assess such details regarding a housing loan is the simpler alternative. Such an online tool is available on websites of reputed housing finance companies. Using this tool is also convenient since borrowers would only need to enter three details to assess their monthly liabilities.
These details are –
● Loan principal – The amount you borrow is known as the principal. Usually, a maximum of 80% of a home’s price is disbursed as a housing loan.
● Rate – Home loan interest rate is the annual rate of interest that you would need to pay alongside the principal repayment. Lower the rate, lower would be the EMIs and the overall cost of borrowing.
● Tenor – The repayment term refers to the period within which a borrower would need to repay the principal alongside the interest due. A home loan interest calculator allows for the integration of tenor in either months or years.
Knowing how much home loan EMI you can afford is essential if you want to avoid financial distress during the repayment term.
Benefits of using a housing loan interest calculator
Now that you know how such a calculator functions, you must also understand its various benefits.
i. Easy to use and convenient
A home loan interest calculator come with a simple interface, which encourages even new borrowers to assess home loan liabilities. Entering the three simple details in the relevant fields shows the monthly payments that one would need to make, along with the total cost of a loan. Also, one can easily find such calculators online at lenders’ websites and other third-party sites.
ii. Fast calculations
A home loan calculator works on a specific formula. Manually calculating the EMIs using this formula is time-consuming, and it would require the use of a pen and paper. With such an online tool, borrowers can calculate their liabilities on the go from anywhere and anytime.
iii. Error-free assessments
Unlike manual calculations, these tool-aided assessments are always accurate. Since home loans are long-term liabilities, even a minor error could mean severe deviations. Thus, using such a calculator is the safer option when planning your finances.
iv. Useful for comparison
As a borrower, you need to seek the lowest home loan interest rates. However, doing so is much easier when you can compare the housing loan offerings from various lenders. These calculators allow you to do that in a fast and accurate manner. Additionally, because they are free to use, loan applicants can utilise them as many times as they need.
While comparing the home loan rates, borrowers must also consider additional factors. For instance, certain housing finance companies provide pre-approved offers to cut down the housing loan processing time. These offers are valid on several secured financial products, such as home loans, loans against property, and more. You can check your pre-approved offer by providing certain details, including your name and number.
Whether you qualify for such offers, using a home loan interest calculator is always a wise choice. Plan your repayment to avoid any unnecessary complications during the credit tenor.