Home Loan Calculator – The Typical Mistakes That People Make

Most borrowers can get bemused by this thought process as to how can someone make a mistake with an EMI calculator in the first place? However, people make extremely important decisions about the properties they look at or consider buying based on the EMI calculator. Hence, invariably, first timers are more prone to the following mistakes:

EMI calculators do not consider down payment, processing charges et al.

An ideal home loan calculator will assist in making relatively accurate calculations for basic understanding of the details. The figures most people have ready when they consider home loan are far from accurate. So, some people fail to consider that they will have to pay almost 15% to 20% of the total cost of the property as the down payment before they get a housing loan. Home loan calculators cannot anticipate and include ancillary charges like processing fees, home loan protection plans, etc. So, do not take a loan without considering all these amounts that will get added into the cost of the property.

EMI calculators for home loan do not dictate actual interest rates.

Some home loan calculators in India have a basic interest rate in their calculations. Most people, however, make home loan calculations with such a rough number. The truth is, interest rates available for you will be defined by several external and personal factors. Banks or housing finance companies will see your CIBIL or FICO credit score, earnings, assets, liabilities and professional track record before suggesting the interest rates.

So, do not include the lowest interest rate available in the home loan calculations and calculate your monthly home loan EMIs as per that. Discover the range of interest rates that you can afford to repay easily. Hence, you will know better than to enter into the contract with an unreasonably high rate of interest for your home loan.

EMI calculators cannot suggest the right home loan tenure.

Figuring out the property you plan to buy will help you to choose the principal amount. Your lender, in turn, will select the rate of interest for that housing loan. You can choose the tenure of the home loan to suit your financial circumstances. Most people want low EMIs; though they ignore the amount of the total interest it can lead them to. Some people understand that and plan too risky a tenure that can threaten their property. Home loan calculators in India cannot select the right tenure for you. If you are a first timer who is fairly new to personal finance, take the help of an expert, who can ensure the right balance for you.