Inflation today can make your dream of owning a house seem a lot less like, but with the help of an affordable Home Loan, you too can actualize your ambition of being a homeowner. And not just that – if you’d like, you can utilize the amount on property development, thereby maximizing your returns. No matter your ambition, a home loan is an excellent solution.
Taking a home loan requires that you possess certain documents, earn an income that’s within the recommended range and possess a decent credit score. That’s not all, though. You should also note the value of the home loan’s equated monthly installments (EMIs).
In this article, you will learn more about the EMI payable on a home loan and how to calculate it using an online tool.
What is an Equated Monthly Installment (EMI)?
When you secure funding through a loan, the lender expects to receive frequent repayments towards the borrowed amount. Before applying for a loan, you should select the amount, interest rate, and tenor that is feasible in the long term.
The repayment of a home loan occurs in the form of monthly installments. The EMIs are directly proportional to the loan amount, though the lender charges an extra amount as interest. The idea is for you to draw up a schedule of affordable EMIs, so as to not compromise your repayment capacity in the future.
What is a Home Loan EMI Calculator?
Previously, if you wanted to learn what the EMIs on a loan amount were, you needed to calculate using pen and paper. Not only was this method slow, but it produced incorrect results too. This has made many borrowers take loans that they now struggle to pay.
Nowadays, you can determine the EMIs for a loan amount with the housing loan EMI calculator. This tool shows you the EMIs and prepares you for the repayment process.
To use it, simply input the desired amount, interest rate, and tenor.
Six Benefits of Using a Home Loan EMI Calculator
Below is a list of six reasons explaining the advantages of using a home loan EMI calculator:
1. It is Accurate
Using the EMI calculator guarantees you correct results. From the information relayed, you can view the EMIs which comprise the principal amount and the interest component.
2. It is Fast
Like we said before, manual calculations are prone to mistakes and are typically slow. Using the online calculator ensures that you receive the results promptly. After inputting the required details, it discloses results based on the details supplied within seconds.
3. It Helps You to Compare Lenders’ Interest Rates
Interest rates differ among lenders, and it’s smart to know what each one offers before applying. The interest rate affects the EMIs, determining whether you’ll pay high or low EMIs.
Asides from interest rates, you can also determine which one offers a longer tenor, assuming that you desire a long-term home loan. You can make informed decisions like selecting a decent lender by utilizing the home loan EMI calculator.
4. It is Easy to Use
Not only does the home loan EMI calculator promise you speed and accuracy, but it is also a user-friendly tool. You won’t encounter any trouble inputting details or comprehending the results.
5. It Helps You Decide on the Amount to Borrow
By using the online calculator, you can know the amount that matches your budget and save yourself from becoming a loan defaulter in the future.
6. It Enables You to Make Prepayments
A prepayment involves paying a lump sum towards a loan, thereby reducing the EMIs. By doing so, you can close a 20-year loan early. The calculator allows you to weigh your options and decide whether a prepayment is feasible or not.
Note that you can only enjoy the zero-charge policy on prepayments when you’re on a floating-interest home loan. You can opt for prepayments on a fixed interest loan, but you will be charged.
Two Ways to Reduce Home Loan EMIs
Below are two ways to lower the EMIs on an existing home loan or one you desire to take:
1. Opt for a Balance Transfer
This is a method whereby you move your home loan to a new lender, thereby closing the previous loan account and opening a new one. It is a great way of lowering the EMIs on an active home loan.
You can use the home loan balance transfer calculator to determine your eligibility for this option.
2. Negotiate Better Terms
You have the right to discuss with your lender the issue of better terms and conditions. However, your lender will likely approve your request if you have a great credit score. Having a score of 725 upward works fine.
The recent interest rate cuts have made home loans more desirable than ever. We encourage you to take advantage of this great opportunity.
However, ensure that you apply for an amount that you easily repay. A home loan EMI calculator is right for this task and it’s available on your favorite lender’s website. Know your EMIs before applying today.