Home Loan Interest Calculator tools are needed for calculating when you are planning for a home loan.
Equally, home loans can substantially make it easy for a person who is not financially prepared to become an easy homeowner. Besides, home loans are big-ticket expenses, and the amount of the loan will be large.
Little wonder then that home loan EMIs eat into the greater share of people’s monthly incomes and so loan applicants consequently must apply for a home loan only after a proper assessment of their repayment capacity and creditworthiness.
But before going into the nitty-gritty of how the home loan interest is calculated, delving into and reflecting on the easiness a home loan borrower experiences while repaying the loan, let us go through a detailed discussion of home loans and home loan EMIs.
Home Loans and Home Loan EMI: An Overview
Home loans are primarily secured loans that are secured by people to buy a house. They offer low-interest rate loans with repayments through home loan EMI, which comes with end-use restrictions.
In such cases, the home loan EMI would depend upon the amount one can avail of, the tenor one can opt for, and the interest rate one is offered.
An EMI house loan is nothing but the pre-decided sum of money that someone is supposed to pay each month if he or she wants the loan to be cleared within a stipulated period, and after that period, too, he or she is left with no burden of being in debt at all.
The EMI on the home loan that you opt for will decide how easy or difficult it will be to pay off a loan. Any applicant opting for any sum of loan has to opt for an amount that is repaid in such a manner that one finds it convenient to pay off any loan.
One of the most important online tools for a loan borrower is an interest calculator for home loans, which helps a borrower accurately calculate the home loan EMI. It thereby allows home loan borrowers to equip themselves for this new EMI, which they will now have to bear every month, and comfortably repay their home loans so that at no point in the home loan journey is there a probability of loan default. The EMI of the home loan is calculated using the following formula:
Home Loan EMI=P x R x [(1+R)^N / [(1+R)^N-1]]
Where,
Here, P represents the principal sum of the loan, N is the loan tenor expressed in months, and R is the monthly rate of interest.
The EMI can be calculated using a very complex formula. With many variables, it is very complex to calculate one’s EMIs manually. It does all the calculations itself further eliminating any chances of any kind of errors entering into the calculations.
Similarly, a home loan interest calculator will give you the same after all the necessary inputs are done. This, besides the home loan EMIs, shall also indicate to you the total interest that shall be imposed as a loan.
The results returned finally by the house loan calculator will also give you the total cost of borrowing the loan, thus giving you scope to analyze whether availing of this home loan is the right decision in your case. How to Use the Home Loan Interest Calculator? Now, the following shall be used to make the home loan interest calculator operational:
- First of all, it is provided to ask the user about the money he would like to borrow in the form of a House Loan.
- After this, it enquires about the interest rate quoted to you and the tenor of the loan you are interested in opting for.
Once you feed in details of these in the calculator, the calculator gives the results out for you. If payable by you, apply for the loan based on the loan EMIs that you see on your computer screen. If you think the loan EMIs come out to be too high or too low for testing purposes, you may accordingly adjust the loan tenor and loan value so that you arrive at a figure that suits you quite well.
In simple words, an online home loan EMI calculator can surely turn your journey through loan planning and repayment into an easy venture.
Even the calculator itself is free; therefore, its use is a must for everyone.
In addition to the home loan interest calculator, two more calculators become indispensable on the part of the borrowers: firstly, a home loan eligibility calculator, which will help improve the chances of getting approval for a loan on favorable terms and conditions; and secondly, a home loan prepayment calculator, if you want to pay off your loan before the agreed tenor of the loan, to get rid of the loan and become debt-free as soon as possible.
Before we talk about home loan interest calculators and discuss how they can make a home loan borrower’s loan repayment journey easy, let us talk about home loans and home loan EMIs.
What are Home Loans and Home Loan EMIs?
Home loans are secured loans that people avail of to buy residential properties. These low-interest-rate loans come with end-use restrictions and are repaid through home loan EMIs or equated monthly installments.
The home loan EMIs that one must pay are decided based on the loan amount that one borrows, the loan tenor that one goes for, and the home loan interest rate that one is offered. The home loan EMI is essentially a pre-decided sum that one must pay each month if one wants to repay the loan within the designated period and become debt-free completely.
The home loan EMI that you choose to go for will affect how easy or difficult it will be for you to repay a loan. Loan applicants must choose a loan amount in such a way that loan repayment becomes easy.
A home loan interest calculator is an important online tool that can help loan borrowers accurately assess their home loan EMIs even before applying for a loan. Doing so allows home loan borrowers to prepare themselves for the new EMIs they will need to pay each month and comfortably repay their home loans, without facing the probability of a loan default at any juncture within the home loan journey. Home loan EMIs are calculated using the following formula:
Home loan EMI = P x R x (1+R)^N / [(1+R)^N-1]
Here,
P is the principal loan amount, N is the loan tenor in months and R is the monthly interest rate.
The EMI calculation formula is a complex one. There are many variables involved and therefore, manually calculating one’s loan EMIs is not easy. This is where a home loan interest calculator becomes indispensable. It does all the calculations for you while also eliminating any chances of any kind of errors entering into the calculations.
After doing all the required, the home loan interest calculator gives you your home loan EMIs, along with the total interest you will need to pay on the loan.
The final results delivered by the house loan calculator will also give you the total cost of borrowing the loan, thereby giving you the chance to assess whether the decision to avail home loan is indeed the right one for you.
How to Use the Home Loan Interest Calculator?
If you want to use the home loan interest calculator, here are the steps to follow:
- To start with, the house loan calculator will require the user to enter the loan amount that they want to borrow.
- After this, the user is required to enter the rate of interest they have been offered and the loan tenor that they wish to opt for.
Once you enter these details, the calculator will give you your results. If you can afford the loan EMIs you see on your computer screen, go ahead and apply for the loan. However, if you believe that the loan EMIs are too high or too low for you, you can adjust the loan tenor and loan value to arrive at an amount that works well for you.
In conclusion, the home loan EMI calculator is a tool that can make loan planning and your repayment journey a lot easier. The calculator is also free to use and therefore, everyone must make good use of it.
Alongside using the home loan interest calculator, borrowers must also use the home loan eligibility calculator to further their chances of loan approval and on beneficial loan terms and conditions and the home loan prepayment calculator if they want to repay the loan before the agreed loan tenor and become debt-free quickly.
