Home loans are substantial loans which borrowers take to buy a home of their own. The loan amounts to tens of lakhs and the repayment also takes 15 to 20 years. Since a home loan is a big liability which borrowers undertake for a long period, it is important that the loan is affordable. If the loan repayments are unaffordable the borrower might end up in a debt trap or even have to sell off his home to get rid of the loan burden. How does one assess the affordability of the home loan EMI before availing the loan?

The answer is simple – through a home loan EMI calculator. Let’s understand how –

What is a home loan EMI calculator?
A home loan EMI calculator is an online calculator which calculates the EMIs payable for the home loan even before the loan is availed.How does the calculator work?
The home loan EMI calculator requires some information based on which the EMIs are calculated. The information includes the amount of loan availed, the repayment tenure and the applicable interest rate. Once all the details are fed into the calculator, the EMIs are calculated and displayed. The calculator uses the following formula to calculate the EMIs –
EMI = [P x R x (1+R) ^N] / [(1+R) ^N-1], where P = the amount of loan the borrower wants to avail, R = rate of interest applicable and N = repayment tenure

Also Read : How does a home loan EMI calculator works?

Benefits of the home loan calculator

The home loan EMI calculator is a very effective tool because of the benefits it provides. These benefits include the following –

The calculator calculates the accurate EMIs instantly

The calculator is an online tool which frees you from the task of manually calculating your home loan EMIs. You just have to enter the loan details and the calculator calculates the EMIs for you. The calculation takes seconds and the EMIs calculated are accurate.

You can assess the affordability of the loan

By calculating the home loan EMIs, the calculator helps you in ascertaining the affordability of your home loan. You can find out whether the amount of loan which you require would be affordable to repay or would it burn a hole in your pockets.

You can control the EMIs you pay

One of the best parts about home loan EMI calculators is that the calculators are flexible. They let you change the EMI by changing the loan details. If the calculated EMIs are higher and unaffordable, you can either reduce the loan amount or increase the repayment tenure to make the EMIs more pocket-friendly. If, on the other hand, the EMIs are easily affordable, you might want to increase them for paying off the loan quickly and reducing the interest burden or for availing a higher loan. You can, therefore, increase the loan amount (if you want a higher amount of loan) or reduce the repayment tenure (for paying off the loan quickly) and the EMIs increase. Thus, home loan EMI calculators give you complete control over the amount of EMIs which you would pay for the home loan.

You get a loan amortization schedule too

The EMI calculator not only calculates your home loan EMIs, it also gives you a complete amortization schedule of your home loan payments. You can see the interest component and the principal component of your EMI payments. You can also see the statement of outstanding balance of home loan after each EMI payment. This amortization schedule, thus, gives you a clear picture of your home loan repayments.

It is simple to use

The home loan EMI calculator is simple to use. You don’t have to be internet savvy to use the calculator for calculating the EMIs. The calculator is user-friendly and calculates the home loan EMIs based on three simple inputs of loan amount, interest rate and repayment term.

It helps in comparison

If you choose EMI calculators of loan aggregators, you get the EMIs of home loans offered by different lenders. You can then compare the EMIs and choose the lender which offers the lowest EMI. Thus, the calculator also helps you in comparing the different home loans available in the market based on their affordability.

So, home loan EMI calculators are very helpful in finding the home loan EMIs and ensuring that the EMIs are affordable. Before you apply for a home loan you should use the calculator, available on various online websites, to calculate your home loan EMIs and ensure that the EMIs don’t burn a hole in your pockets.

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