Types of Home Loan Calculators You Need To Know About

Banks provide their customers with a variety of calculators and tools to help them through their home loan process. There are two main types of home loan calculators that a home loan applicant can make use:

1. Home loan eligibility calculator

The home loan eligibility calculator is the first calculator that a home loan applicant must use before applying for their loan. This calculator provides the applicant with an estimate of the amount of loan they are eligible for. The calculator takes into account the tenure of the loan and the interest rate that the applicant wishes to pay and the income level of the applicant. This is a basic estimate of the amount the bank will be willing to provide to the applicant. This helps the applicant to plan out how to improve their eligibility to get a higher loan amount. There are a few calculators that even take into account the amount the individual spends each month on a variety of expenses.

2. Home loan EMI calculator

There are a number of ways in which this home loan calculator can be used by a home loan applicant. An EMI calculator is firstly used to calculate the EMI amount that the applicant is required to pay each month to the bank. The EMI calculator also helps individuals plan their finances in advance to ensure that they meet EMIs each month. The calculator can be used to calculate the EMI even for floating interest rates. One can use the calculator to predict an estimate of the EMI that will be charged. The calculator can also be used by the applicant to find out the actual breakup of the EMI. The EMI is usually broken into two parts which is the interest and the principal amount. If the applicant plans on repaying the loan amount in full, they need to plan on when to do so based on the EMI charge.

The home loan calculators are extremely important as they guide the applicant through the entire home loan process . It is extremely important for the individual to plan in advance how they plan repaying their loan. Also in the case of floating interest rate, it is crucial for the applicant to use a home loan calculator to calculate an optimistic and pessimistic EMI amount for the month. This will help them be prepared for any changes in the interest rate both good and bad.

The main reason why banks stress on the importance of using these home loan calculators is that they are free. Also it helps ensure no defaults in payment occur as it may force the bank to sell the applicant’s house to get the loan amount back.