Summary: Read on to learn all you need to know about the home loan EMI calculator, how it works, and how to use it.
When looking to purchase a home, an important factor to consider is the monthly payment or Equated Monthly Installment (EMI) you will be required to pay towards your home loan.
An EMI is a set monthly payment made to a lender by a borrower until the loan is paid off. Nevertheless, manually calculating your EMI can be a difficult and time-consuming operation.
Several banks and financial institutions include a home loan EMI calculator on their websites to help with this procedure. In this post, we will explain how an EMI calculator works and how you can use it to estimate your monthly payments or instalments.
What is a Home Loan EMI Calculator?
A home loan EMI calculator is a simple online tool for estimating monthly loan payments or instalments.
You need to enter your loan amount, interest rate, and term, and the calculator will do the math for you. It will display your required monthly payment, the total interest you need to pay for the loan, and even the whole amount you need to repay.
You can better manage your finances when taking out a home loan by using these online calculators, which are free.
How Does a Home Loan EMI Calculator Work?
A home loan EMI calculator calculates the EMI using the mathematical formula given below:
EMI = (P x R x (1+R)^N)/((1+R)^N-1)
- P is the loan amount
- R is the interest rate per month
- N is the loan tenure in months.
The EMI is calculated by taking the principal amount, interest rate, and duration into consideration. The calculator then displays the EMI, total interest payable, and the total amount owed over the loan term.
Steps To Use a Home Loan EMI Calculator
It’s very simple to use a home loan EMI calculator. Just follow these easy steps:
- Step 1: Go to the Home Loan EMI Calculator page on the website of your bank or financial institution.
- Step 2: Enter the amount you want to borrow as a home loan.
- Step 3: Type in the interest rate the bank or financial institution offers. Remember to compare interest rates from different lenders before finalising one.
- Step 4: Input the loan tenure in months, the period you want to take the loan.
- Step 5: Hit the “Calculate” button to get the results.
Once you’ve entered all the details, the calculator will show you the monthly EMI amount, the total interest you will pay, and the total amount you will have to pay back during the loan tenure.
This information will assist you in better planning your finances and understanding your loan payback timeline.
How To Get a Home Loan at the Lowest Interest Rate
Getting the home loan lowest interest rate on your home loan is essential to lower your monthly EMI and total interest amount payable.
Here are some points that you must follow to receive the best possible interest rate on your home loan:
- Check Your Credit Score: Your credit score greatly impacts the interest rate on your home loan. Having a good score means you are a highly valued borrower, and lenders are more likely to offer you the lowest home loan interest rate. Check your credit score before applying and, if required, take essential steps to increase it.
- Choose a Shorter Tenure: Selecting a shorter term will assist you in lowering the overall interest payable on your home loan. This, however, will raise your monthly EMI.
- Compare Interest Rates: Compare the interest rates given by several banks and financial organisations before applying for a house loan in any particular organisation to get the best and lowest interest rate.
- Make a Higher Down Payment: This will help you reduce your loan amount, lowering your monthly EMI and total interest payments.
If you plan on taking a home loan, using a home loan EMI calculator can help you estimate your monthly payments easily. Make sure to use the calculator your lender offers to get accurate results. This calculator lets you plan your finances better and understand your loan repayment schedule.
And finally, remember to compare interest rates and take steps to improve your credit score to get the best deal available!