Buying a home is the biggest financial decision one takes in their entire lifetime. It bestows a sense of achievement, status, and identity. Besides, a home is a perfect place for peace and comfort. With the increasing rates of properties, buying a home from your savings is not a wise decision. It can put a big dent in your finances. But that does not mean you should give up on your dream of owning a house.
Applying for a home loan is a better option to buy your dream home without putting any burden on your monthly budget. The loan amount depends on the market value of the property. Most lenders clear up to 70% of the preferred home’s value as a loan. Compared to other loans, a home loan comes with affordable interest rates and flexible repayment tenure.
Home loan calculator
Before applying for a home loan, it is imperative to assess your needs and affordability. You must establish how much you need to borrow and the duration within which you can afford to pay the loan. It is advisable to use a home loan calculator to determine an affordable EMI based on your needs.
How does a home loan EMI calculator work?
A House loan calculator is an online financial tool available on the lender’s website. It enables the borrowers to determine their affordability for a loan before applying for a home loan. There are three main components in a home loan calculator, such as:
- The principal loan amount
- The preferred interest rate
- The repayment tenure
To calculate an affordable EMI amount, you will need to enter the loan amount you need, interest rate, and loan tenure figure on the calculator. After providing the said detail, an EMI amount will instantly show up on the calculator.
The best part about a home loan calculator is that you can alter the above-said values as many times as you want until you come up with an EMI amount that best works for you.
Benefits of a home loan calculator
Easy calculation
The online home loan EMI calculator offers the easiest and safest way to determine a suitable EMI amount. All you need to do is enter the loan amount, interest rate, repayment tenure, and processing fees (if applicable). The best part is that it saves a chunk in calculating the home loan EMI. It produces a result within just seconds. Anyone with a basic knowledge of the internet can use the home loan EMI calculator.
Choosing the right repayment tenure
A home loan comes with a loan tenure ranging between 3 to 15 years. After deciding the loan amount, you can use the home loan calculator to determine a repayment tenure within which you can pay the EMI amount. If you have the budget, it is advisable to opt for a shorter loan tenure. This way, you can significantly reduce the interest rate.
Managing the home loan
It is worth noting that during the home loan tenure, you may get a salary increment or a bonus in your current job. You can use such a surplus amount to repay the home loan. As there are no prepayment penalties on home loans, you can leverage this opportunity to reduce the financial burden on your shoulder.
A home loan calculator allows you to check how prepayments can help pay off the loan before the end of the loan tenure. Keep in mind to check with the lender to know if they have such a facility.
Compare multiple offers
A home loan features and benefits vary across different lenders. Comparing multiple lenders and their offers is imperative before applying for a home loan. This way, you can choose a lender that offers the best interest rate and most flexible loan tenure based on your eligibility. A home loan calculator makes the comparison of lenders easy. It enables you to find a lender that offers the best interest rate, loan amount, and loan tenure.
Accurate results
While calculating an EMI amount manually, you are subject to errors due to which getting an accurate result may not be possible. But a home loan calculator offers the most precise result while calculating the home loan EMI. It ensures 100% accuracy within just seconds.
Validation of information
The upside of a home loan EMI calculator is that it helps negotiate a housing deal with the lender. For instance, you can verify the lender’s repayment schedule through the details in the online home loan calculator. However, it is worth noting that the numbers differ from time to time. The reason is that lenders add additional fees in equated monthly instalments (EMIs) calculation.
In short
Applying for a home loan is the best option to buy your dream house without dipping into savings or investments. However, before applying for a home, it is imperative to use a home loan calculator to determine an affordable EMI amount.
