When applying for a home loan, it is paramount that you plan your finances well to avoid defaulting on the EMI payments. Read on to know how the EMI calculator can help in financial planning.
A home loan is probably one of the biggest credits you may avail of in your life. To repay the amount on time, you must plan your finances well so that you can pay the EMI (equated monthly instalment) consistently throughout the loan tenure without affecting your other regular household expenses.
To know exactly how much the home loan will cost you, you must know the exact amount you must pay as EMI. The home loan’s EMI depends on several factors, including the amount you borrow, the interest rate levied by the lender, and the duration of the loan. Today, planning the home loan EMI is easier than ever before; you can use the home loan calculator to compute the exact EMI applicable on your loan.
What is a Home loan EMI Calculator?
A home loan EMI calculator is an online financial tool that helps you calculate the EMI on your home loan beforehand to plan your finances well and make an informed decision. Today, almost all the lenders in India have this online tool on their website. It is easy to use and does not need any technical experience.
How does a home loan calculator help in financial planning?
The home loan EMI calculator can help you choose the right lender and the best loan offer. For example, if you are comparing the offers from three different lenders who are willing to approve your loan application, with this tool, you can know the exact EMI you may have to pay based on their offer. Once you get to know the EMI amount and the total borrowing cost, you zero-down on the lender.
When you know the exact EMI, you must pay to the lender in advance; you can plan your monthly budget more efficiently and make necessary arrangements to be able to repay the EMI. Suppose you don’t know the EMI beforehand, and when you avail the loan, you find that the EMI is unaffordable. Such instances can cause major financial trouble. Using the home loan EMI amount well in advance is the best solution to avoid such issues.
One of the most important things about applying for a home loan is to decide the amount you wish to borrow. You can determine the borrowing amount based on the property value, but you must be aware of your current financial status and decide if you can repay it.
You can use the home loan EMI calculator to know exactly how much you can afford to repay without compromising your other financial goals. If you cannot afford to repay a certain amount, you can reduce the principal amount to suit your budget.
Another significant way in which home loan EMI calculator helps you plan your finances before applying for a home loan is that it enables you to choose the right tenure. The loan duration has a direct impact on affordability. The longer the term, the lower the EMI and vice-versa. Based on your EMI calculations, you can choose the right tenure so that you can comfortably repay the EMI.