The EMI calculator is a handy tool for Home Loan seekers as it allows them to determine the affordability of the loan by giving a near accurate estimate of the Equated Monthly Instalment (EMI) to be paid. The borrower provides the required details like loan principal, tenure and interest. Sometimes the interest rate is already set in the calculator, as per the lending rates of the bank/NBFC under consideration.
The important factors to bear in mind when using a Home Loan calculator are listed below:
Amount to be Borrowed
The first step to avail a Home Loan is to specify the budget and determine the Home Loan to be borrowed. Based on the current real estate prices and type of property to be invested on, the budget is set. Then, the down payment sum (which has to be minimum 10% of the property’s value) will have to be kept aside. The remaining amount (60%-90%) is financed by the lender. This value is to be input into the Home Loan EMI calculator.
Repayment Tenure of the Loan
The next variable is to be decided by the borrower after considering the range allowed by the specific lender. This can go up to three decades; the longer the tenure stretches, the EMI becomes lower but the overall interest to be paid increases significantly. A borrower can use the EMI calculator with varying tenures to make comparisons.
Complete Split up of the Repayment Schedule
The interest rate is a matter of the bank’s or NBFC’s policies and the borrower does not really have a choice but to accept the rate offered. This rate will have to be entered along with the other details mentioned above. Then, the calculator will display the EMI, along with the amortization details.
So, the borrower will get a detailed account of the components of the EMI- how much of it is going towards the principal and the interest over the tenure and the remaining outstanding amount.
