Understand Your Expenses With Home Loan Calculations

Most expenses for a home loan seem small as compared to the principal amount, due to which people fail to take them into account and include them in the principal amount. Thus, it should come as no surprise when the final home loan calculations bring about EMIs that are shockingly huge to pay. It makes sense, thus, to include these minor expenses in your principal amount while calculating your EMIs with the home loan EMI calculators in India .

Processing fees:

It is a tiny percent of your principal amount and can even be waived off in certain cases. In most banks, it can be anywhere up to 1%. However, the final processing fee will be charged along with the requisite service tax.

Stamp duty:

This amount was earlier included in the principal loan; however, from mid-2012, this amount must be paid in its entirety separately. So, calculate the stamp duty and set aside sufficient funds for it like you would save up for the down payment. Since it costs up to 8% to 10% of the principal amount, you must include it in your home loan calculations carefully. As, you can’t pay it via EMIs, exclude it from the amount you enter in the home loan EMI calculators.

HLPP:

A home loan protection plan is a term insurance product for homes. You can pay it all at the start or you can pay it in monthly instalments. This choice mostly depends upon available funds after the down payment and stamp duty cost. If you plan to pay it on a monthly basis, you must include it accordingly in your EMI calculations.

Interest rate fluctuations:

These are really challenging to anticipate. Most people fail to include them in the home loan calculators in India . But, for floating and fixed interest rates, these fluctuations are very common. So it would be smart to make a few rough calculations to observe their impact on your EMIs. You should be in a position to pay off the EMIs in spite of the variations as they would occur eventually. Therefore, don’t plan your EMIs in such a way that there is no money left for these additional expenses.

It is imperative to foresee all these factors and understand their impact on your total expenses. A smart strategy would be to keep sufficient room in your monthly cash flow for these additional expenses. So, plan smart and choose well for your dream home.