A slit increase has been seen in the number of Home Loan buyers after the demonetization. This increment had significantly seen when the budget 2017 was announced. Wherein many new policies were introduced for benefiting the Home Loan buyers as well as the property developers. The real estate market went through major changes especially, after the repo rate was cut down by the Reserve Bank of India (RBI), which considerably reduced the Home Loan rates.
Although, Home Loans have become economical, buying a housing property is not everyone’s cup of tea. As the cost of real estate is constantly increasing, it can get difficult for an average salaried person to buy a house. Thus, when you invest in a property, it is essential to check your affordability and then invest your funds. One such way here is you can check your Home Loan repayment capacity. After determining your repayment capacity, you can set your housing budget.
To check the Home Loan affordability, one can use the Home Loan EMI calculator. Many financial institutions offer an EMI calculator on their websites, which helps the applicant calculate the interest amount he will pay monthly. Talking about interest amounts, three factors help in determining the equated monthly installments.
- Loan Amount:
The amount you borrow from a financial institution for buying a home/property is one factor that helps determine your monthly installment. Depending on your income, credit score, age, documents, etc., the lender considers your eligibility for a Home Loan. To get qualified for a huge loan amount, you need to have a high income. The interest amount charged on the loan will depend upon the amount you have borrowed.
The loan tenor you choose plays a significant role while calculating your EMI. The lender offers you two tenor options to choose from. You can either choose a long-term loan tenor or a short-term loan tenor. You can select the tenor according to your repayment capacity.
- Interest Rate:
The interest rate offered by each financial institution differs. The interest rates on Home loans are the most important factor to consider when calculating the EMI. Although the Home Loan rates have dropped down, it is imperative to compare the lenders and the interest rates before choosing a loan. Because opting for a financial institution that offers a low rate of interest will surely benefit you.
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After knowing what factors determine the equated monthly installments, let’s study how to use the Home Loan EMI calculator.
How to Use a Home Loan EMI Calculator?
There are two options wherein you can calculate your Home Loan EMI; you can either do it manually or visit the lender’s website and can use the online EMI calculator. Calculating the EMI manually can result in errors, as you can go wrong with the calculations. It is advised to use an online EMI calculator to estimate the right amount. For calculating the EMI online, you need to enter your loan amount, tenor, as well as interest rate. After entering the numbers, you can then calculate the monthly installment, which will be your EMI.
Calculating your Home Loan EMI can not only help you check your affordability but will also help you with financial planning. Besides this, you can also experiment with the EMI amount by entering different digits and checking which amount suits you the best. The EMI calculator can also reduce your financial stress once you know how to manage your loan repayments.