Borrowing a home loan is a big financial decision, regardless of what income bracket you fall in. Apart from ensuring that the loan is flexible, you will also need to be aware of how much the loan is going to cost you along the tenor so that you can accordingly prepare your finances and plan your repayment ahead of time. The home loan EMI Calculator is a handy tool in this regard and helps you calculate your home loan EMIs beforehand. Using it you can easily decide the affordability of your home loan in advance, based on which you can borrow the loan on comfortable and convenient terms.

Home loan EMI calculators are readily available on the website of leading lenders such as financial institutions and NBFCs. They are pretty simple to operate. Besides, they provide information in a graphical manner which is easy to interpret and can be adjusted till you reach you decide your preferred loan amount and interest rate to get the results.

Here is how such a calculator helps you all along the home loan process.

Helps you decide how much to borrow

The EMI calculator features various parameters namely the loan tenor, loan amount, and rate of interest. You can adjust and alter the figures corresponding to each parameter in order to check the EMIs for varying loan amounts and interest offerings. You can keep refreshing the amounts for each component until you reach the corresponding affordable amounts for each parameter including your home loan EMIs. In order to determine how much to borrow, you can initially do your research and enter an amount as per the property price of your selected house. Now, keep altering the other components until you arrive at an EMI amount that suits your financial standing. Once done, you will know the exact loan amount you can borrow based on your budget.

Helps you decide on a suitable tenor

The home loan EMI calculator shows you how the tenor can impact the EMIs of your home loan. You can accordingly choose a tenor that matches your convenience. This would make repayment of your home loan affordable no matter the housing loan interest rate you are charged. A longer tenor can make repayment of the loan easier while a shorter one helps you clear the debt faster. Alternatively, the longer you stretch the home loan the more will be your payment towards the loan’s interest. So, choose a flexible tenor based on your calculations and take a home loan from experienced lenders to get a sanction of up to Rs.3.5 Crore on low interest rate, which you can repay on a comfortable tenor of up to 25 years.

Helps you create a monthly expenditure budget

Experimenting with the parameters of the EMI calculator will give you a chance to check out the various EMI amounts you could potentially end up paying. You can use this as a reference point to accordingly create a monthly expenditure budget and see what fraction of your income is taken up by the EMIs. Accordingly, you can modify your income-expenditure ratio and tweak your budget or take actions to reduce your expenditure on unnecessary expenses, so that you can afford the EMIs and still have some cash in hand for savings. For instance,  on a loan amount of say Rs. 20 lakhs, taken for 240 months, on an annual interest rate of 8.5% the total interest payable is Rs. 21,65,716 it’s total payment (principal + interest) is Rs. 41,65,716 and monthly repayment will be Rs. 17,356.

Helps you create a plan for repayment based on the results

Computing the EMI in advance gives you a better perspective of your financials. This, in turn, gives you enough room to plan your savings and investments for each month aside of the EMI. Additionally, the calculator helps you get accurate results instantly, which beats doing the calculation manually over and over again. So, taking all the factors into consideration, say you want to borrow Rs.2 Crore as a home loan on 11% interest. You will be paying Rs.2,06,483 as EMI for a period of 20 years. In case you find this figure overwhelming, consider revising it by negotiating loan terms with your lender or prepare to save from beforehand to fund the repayment better. You can do this by planning FD investments, purchasing shares and debentures, etc.

Helps you know the breakup of finance charges

The home loan calculator helps you understand various financial charges such as total interest paid and value of processing fee. Most financial institutions and NBFCs present these charges as a percentage of the principal loan amount, it thus becomes imperative to know them to decide the terms of the loan. Over the course of your repayment cycle, you may choose to increase the value of your EMIs to pay off the loan faster. It is at this time you may want to be sure about these minor charges, even if you decide to increase EMI amount by up to 5%.

Helps you take advantage of other claims

The EMI calculator helps you pre-plan your loan. In other words, once you know your repayments you can set up your monthly expenses accordingly. Moreover, if you have to pay your EMIs on time you can claim tax deductions under Section 80C by up to Rs. 1.5 lakhs on the principal amount repaid via your annual EMIs. In addition, you can also get tax deductions under Section 24 up to Rs. 2 lakhs on the interest component of the loan that you repay annually through your repayments.

Now that you know about the EMI calculator, you can apply for your home loan on pre-decided parameters to ensure that the loan is easy on your pocket. However, before applying, ensure you are aware of the documents required for the home loan and also check to make sure that you qualify for the loan. You can do this by using the home loan eligibility calculator.