Everything You Need To Know About Home Loan Emi Calculator

Posted by Rudra Raghavan on April 16th, 2019

A home loan is a loan product provided by financial institutions who wish to buy a home, but they do not have the sufficient finances for carrying out the purchase of a home. In a home loan, a financial institution will provide the loan amount to the customer for the purchase of a home. When an individual opts for a home loan, it will require a great amount of planning, since the customer is borrowing a lump sum of amount that has to be repaid. Paying off the home loan in India with the interest within a stipulated time period or the tenure of a loan will require a decent amount of financial planning.

Customers should assess their repayment capability before the customer opts for the loan, they do not end up in a financial crisis. Customers who want to know about the amount of money they will have to pay every month until the end of the tenure period can use a home loan EMI calculator for finding out the amount.

These calculators are available on the official websites of the financial institution, so a customer can use them at any time they want. Calculators will require a few details on the home loan for providing an accurate result on the home loan. The customers can use the home loan EMI calculator before applying for the home loan since it will help them assess their repayment capacity for the loan. There are some factors that may affect the EMI and they are listed below.

Factors affecting EMI and its calculation:

When the interest rate changes during home loan tenure: Depending on the type of interest rate chosen by the customer will the interest rate be affected. If a customer has opted for a floating rate of interest, their home loan EMIs may change according to the changes in the market lending rates. If a customer thinks floating interest rate is the risky option, they can opt for a fixed interest rate.

When home loan principal amount has been pre-paid: Almost all financial institutions allow the customer to make extra payment or pre-payment towards their home loan. This will lower their outstanding principal amount and the interest burden. The financial institution charges a certain percentage (1% - 3%) on the outstanding principal amount as pre-payment penalty.

When tenure of loan has been changed:  Whenever a customer changes the home loan tenure, their EMIs also tend to change. The longer the home loan tenure, the lower will be the EMI and shorter the home loan period, the higher will be the EMI. But a customer should understand that if they opt for a long home loan tenure, then it would mean more interest payment towards the home loan that will increase their cost of credit.

Also See: Home Loan, Loan Tenure, Loan Emi, Financial Institutions, Loan, Interest, Home
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