Check Your EMIs On A Home Loan Calculator

EMI calculations are what almost every home loan computation comes down to. This is the number you want to be sure of. Every other number in your calculation will have to change if you cannot fit in the necessary EMI calculations into your monthly income along with other expenses. So, a home loan EMI calculator is really useful in that respect. The smart thing to do is to understand the factors included in this EMI calculation.

Interest rates

This is the most important factor .Why, you might ask? It is the only factor that can vary after you have borrowed money from a bank or a HFC (housing finance company). You will have to consider several interest rates to identify the most suitable one. The most common response is that lower the interest rate, easier the repayment, making it the better choice. However, while making some basic home loan EMI calculations, you need to identify the highest rates you can afford as well. Without this number, you have almost no reference point for interest rates negotiation with the loan officer.

Principal amount

Most first time borrowers commit the mistake of entering the selling cost of home as the principal amount in home loan EMI calculators in India . You won’t get the right idea with such calculations. Putting an accurate amount into this column is vital for realistic understanding of your monthly EMIs. However, you cannot reach that understanding with just the selling cost. You will need to enter the cost that lenders will pay to the seller i.e. the cost after deducting the down payment. Add stamp paper duty, processing charges and taxes to get the most accurate number possible. Throw in some more for the term insurance plan like the HLPP that most loan officers promote vigorously. This amount will then give you a realistic understanding of the EMIs.

Loan term

The duration of the loan is an important factor too. This number can change based on the availability of funds. If you have enough funds saved up to repay on a monthly basis, you may want to pay higher EMI instalments for a lesser number of years. Thus, you save a lot in terms of the interest you pay as well. However, you can pay lesser EMIs for a longer period too, which makes it an easy way to pay off the EMIs for the years to come. The only disadvantage is – you will land up paying a considerably large amount as interest. At times, it can be more than the principal amount itself.

So, you need to understand which kind of house you can buy, which home loan you can afford and the number of years that you need to pay the EMIs for with an ideal home loan calculator in India.