How does a Home Loan EMI Calculator Works

Posted by Arwind Sharma on July 30th, 2016

You would want to buy a home that fulfils your family’s dreams, while keeping the cost affordable. In most cases, you’d need to get a Home Loan to be able to afford your dream house.

A Home Loan is a great idea, but there are just too many options to choose from. How do you pick the loan with the ideal amount, tenure, and EMI?

This where an EMI calculator comes into the picture.

The Home Loan EMI Calculator

An EMI (Equated Monthly Installment) is the amount you have to pay each month towards the loan. This is calculated using a slightly complicated formula; if you are doing this by yourself, you’ll need some math skills and a good calculator.

You don’t need to do all the math yourself, though. With Internet access and mobile apps, you can get automated EMI calculators to do the work for you.

Looking at Wider Options in Lenders?

Not all Home Loans are the same; interest rates may vary, flexibility in tenures may differ, and some lenders might offer to cut prepayment charges. How do you choose the lender that suits your needs best?

You can use the Home Loan calculator, usually available at financial portals and financial marketplace websites. These compare loan offers from different banks to provide you with a list of options. Simply head to the lender website, and input the required parameters; the home loan calculator computes the EMI amount for you.

How do These Work?

The typical EMI calculator takes in parameters like the loan amount, tenure, and interest rate, and advanced parameters like whether your are paying any advance EMIs.

Other input options include the home value, down payment, your ideal loan amount and processing fee, whether you are looking for home insurance along with the loan, and the fees and charges the lender might levy. You can even factor in prepayments on the loan.

Taking in all these from you, the Home Loan EMI calculator pulls up details of loan offers from various banks and NBFCs. It calculates the loan amount and EMI breakup, and then presents the details regarding these—and interest rates—to you.

The Home Loan calculator can also give you the full amortization details on the offers you choose.

You can even factor in insurance, and homeowner expenses like property tax, and monthly maintenance cost. These can help you in deciding whether to go ahead with a home purchase at the current time, or to stick to your rental home and buy at a later date when you have enough savings to meet homeowner costs.

Home Loan Decisions Made Easy by Home Loan EMI Calculators

These tools greatly reduce your work when you’re looking for a loan. They compare a large number of offers, and use your parameters to list the ideal offers for you. They can also display other details like the loan schedule over the whole tenure.

Now all you have to do is to choose the offer that suits you, keep the documents required for Home Loan handy, and approach the lender for the loan to speed up the process of financing your home.