It is very common for an individual to apply for a home loan when they are looking to buy a house. Now, while a home loan does take the weight off a borrower’s shoulders by covering up to 75%-90% of the property cost, one still needs to thoroughly plan before they apply for it. This is because a borrower needs to ensure that they can comfortably pay off their loan’s monthly instalments.
To understand whether a particular home loan plan is a suitable option, it is advisable to make use of a home loan EMI calculator. This calculator helps borrowers with knowing the monthly instalments of a home loan beforehand. This way, a borrower can decide whether to apply for the loan or look for a better option. This helps in avoiding any financial struggles in the future that could hamper one’s credit score.
Now, to use this calculator, all that one needs to do is fill up details in three areas:
- Home loan amount
This refers to the loan amount that a borrower is looking to get from their lender for the property purchase. Now, the lender will decide the amount to be given only after evaluating multiple factors such as the applicant’s monthly income, age, financial documents, property cost, and so on. If a borrower is looking to get a high loan amount, they need to be earning a high income and maintain a decent credit score (750 or more). The interest rate of the loan could also depend on the loan amount.
- Interest rate
The interest rates that lenders charge could differ from one another. When applying for a home loan, the interest rate is one of the most focused aspects for borrowers. This comes as no surprise, as a home loan interest rate can have quite a significant impact on the overall cost of the loan. Now, this is where a home loan EMI calculator can help. This calculator can make the borrower aware of whether the loan’s interest rate is affordable or not.
- Repayment tenure
The tenure that a lender offers a borrower in which they are supposed to clear a loan is known as the repayment tenure. Some borrowers could choose a short repayment tenure while some could prefer to go for a long one. With a short repayment tenure, a borrower could save on the interest payments of the loan by cutting down the number of monthly instalments. However, do note that the EMI payments would be higher in a short repayment tenure as compared to a long repayment tenure. On the other hand, borrowers looking for easier EMI payments could opt for a long repayment tenure, in which case the interest payments would be more. Making use of a home loan EMI calculator can help in finding a tenure that is most suitable.
Using a home loan EMI calculator is considered to be much easier as compared to manually calculating a loan’s EMIs. This is because, unlike manual calculations where errors could be made, this calculator displays accurate results that can be relied upon.