Since a home loan is a long term financial commitment, borrowers need to plan their financials beforehand. This allows them to meet other financial obligations without cutting their monthly budget.
In this regard, a home loan interest calculator can be helpful. Prospective borrowers can utilize this tool to determine their total borrowing cost and aim for convenient and burden-free monthly payments.
How to use a home loan interest calculator?
Using a home loan interest calculator is convenient and easy. Individuals have to visit the website of their preferred lender and locate their EMI calculator. After this, they can calculate the monthly instalments through these steps:
Step 1: Enter the loan amount.
Step 2: Put in the duration of loan repayment.
Step 3: Enter the rate of interest applicable on the loan, as per the lender.
Upon entering these details, the calculator will automatically derive the total interest and principal along with the EMI within seconds.
Individuals can also look at the amortisation schedule below the calculator to find the breakups of interest and principal amount, which will help them plan finances better.
How does a home loan interest calculator benefit individuals?
As a matter of fact, a borrower cannot change the interest rate on a home loan. However, before borrowing, an individual must consider a few important questions to ask to their home loan lender, including the effect of interest rate on loan payout. This will help them choose between fixed and floating interest rates.
After knowing the interest rate, one can use the housing loan EMI calculator to arrive at a favourable tenor and interest payout.
For instance, suppose someone plans to borrow Rs.80,00,000 to purchase a new apartment at an interest rate of 8% pa. Now, suppose the borrower chooses a repayment tenor of 18 years, here, he/she will have to Rs.69,997 as EMI. At the same time, the total interest payable is Rs.71,19,354.
If the same borrower reduces the tenor to 12 years, the interest payable will also reduce to Rs.44,69,854.
From the above example, it is clear that a reduced repayment tenor is a smart way to decrease home loan interest.
Apart from determining the home loan interest, a home loan EMI calculator also aids borrowers in other ways, including:
Helps decide the loan amount
Individuals can use the slider to alter the tenor until they reach an EMI that they are comfortable repaying. This will help them arrive at a loan amount that fits their monthly budget. Based on this calculation, one can apply home loan in an informed way.
Aids in planning repayment and prepayment
Upon arriving at a comfortable loan amount, individuals can also determine how much EMI they are comfortable in paying every month. This will help them manage their finances in a better way. To ensure timely EMI payments, potential applicants should gauge their monthly expenses and look forward to critical financial commitment.
With better repayment planning, one can also gather enough savings and prepay their loan. This will lead towards a reduced interest payment as the tenor decreases.
Helps in choosing an ideal lender
The home loan interest calculator can also help individuals compare different lenders and choose the one offering better terms and conditions.
Regarding this, one must look out for additional offers on home loans. For instance, leading NBFCs like Bajaj Finserv extend pre-approved offers for existing customers who meet/exceed home loan eligibility. These offers result in a streamlined and fastened loan application process. In addition, they are available across a multitude of financial instruments, including home loans and loans against property. Individuals can check their pre-approved offers within seconds by entering their names and contact details.
Evidently, a home loan interest calculator is an indispensable tool that assists borrowers in ensuring timely loan repayments. It also helps them determine their total interest and principal payable, which can be further utilised to avail tax benefits.