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  • Saturday, February, 2023| Today's Market | Current Time: 08:10:03
  • When applying for a Home Loan, it is essential you apply for the right terms. Buy what are the right terms when applying for a Home Loan? Simply put, terms that ensure comfortable repayment in the long term without straining your finances are the ones you should strive for.

    A key question most first-time home loan borrowers stumble on is what loan amount and tenor they should opt for. The three main parameters that affect your home loan EMI are the loan amount, tenor, and interest rate. While the interest rate will depend on what the lender chooses to extend, depending on your income, financial, obligation, and credit profile, you can decide the loan amount and tenor, basis your eligibility.

    The easiest way to assess which loan amount and tenor are right for you is by calculating the EMI for various combinations to arrive at one best suited to your financial profile.

    Use a Home Loan EMI Calculator to Finalise Your EMI

    Home loan calculations can be complex and time-consuming – not to mention the very real possibility of human error when computing numbers. The easiest way to work out your home loan EMI with different loan amounts and tenors is to use a home loan EMI calculator.

    Most lenders offer online calculators, which provide error-free results in just a click. They are easily accessible and free to use; all you need to do is provide the basic entries. For instance, when you use the home loan EMI calculator, you only need to:

    1. Enter the loan amount
    2. Enter the loan tenor
    3. Enter/verify the interest rate

    Upon entering these values, you will be able to check the corresponding:

    • The home loan EMI amount
    • The total interest payable over the tenor
    • The bifurcation of the total amount payable over the tenor into interest and principal

    Online home loan calculators offer an easy means for borrowers to check various EMIs on the basis of several loan amount and tenor combinations, thereby enabling informed decision-making.

    Prefer to Calculate your Home Loan EMI Manually?

    If despite checking the EMI amount on an online calculator, you would prefer to verify the number through a manual calculation, use the below formula.

    EMI = [P*R*(1+R)^n] / [(1+R)^n-1]

    Where,

    • ‘P’ is the principal
    • ‘R’ is the interest rate
    • ‘n’ is the loan tenor (in months)

    How a Home Loan EMI Calculator Can Boost your Application

    If you’re looking to avail of a home loan, start by considering your monthly disposable income, which is the sum you can set aside towards the payment of your home loan EMI. When arriving at this number, a few parameters you should consider include your monthly salary, your obligations (such as the EMI for a personal loan), and the amount you require for monthly sustenance.

    Once you decide on the EMI sum you are comfortable paying every month, the next step is to assess which loan amount and tenor to opt for. Further, the loan amount will, of course, also depend on your eligibility, capacity for down payment, and preference in terms of the property you wish to purchase.

    For instance, let’s consider the following case as an example:

    • Net monthly income: Rs.60,000
    • Total monthly obligation: Rs. 10,000

    So, here one would be left with Rs.50,000 to cover both – monthly expenses as well as the home loan EMI. Let’s say that the applicant can only afford to set aside Rs. 20,000 towards home loan repayment. In that case, the applicant can use the Home Loan EMI Calculator to finalise their EMI amount by adjusting their repayment tenor till it provides them with their ideal EMI amount.

    Apply for a Home Loan Today

    Once you’ve used the calculator to fine tune your home loan application, don’t waste more time before making your final home loan application. With an optimised application, you can hope to secure attractive rates and benefits on your housing loan.

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