Why Using Technology Is Essential While Calculating Your Home Loan

When you are planning your application for a home loan, one of the most important aspects you are required to study is your EMI options. There are three main components that affect your monthly EMIs:

* Tenure of the loan
* Interest charged
* Principal loan amount

Different combinations of these components will affect the amount of EMI you will have to pay every month. Hence each component must be selected with care. The first thing a borrower must know is that the initial years of your loan repayment are spent repaying the interest charged. It is only during the final years of the loan’s tenure that a large portion of the EMI includes the repayment of the principal amount.

Calculating your EMIs is a crucial part of not only your home loan application process but also your financial planning for the next few years. Banks try to ensure that the monthly EMI charged does not exceed forty percent of the salary of the borrower. For a borrower, it is important that he or she has knowledge beforehand as to how much EMI will be required to be repaid each month to the bank. Borrowers are always advised to take advantage of the tools the bank provides. Most banks have online EMI calculators which allow borrowers to find out how much EMI they have to pay. Also, some home loan calculators in India provide a breakup for each month, effectively showing the borrower which percentage of the amount paid per month is interest and how much of it is the principal amount.

The EMI calculator allows a borrower to also take into consideration any amount of money paid to the bank in advance and also if a prepayment of the loan would be beneficial. Hence it is vital that the calculations conducted to find out the EMIs are correct. Incorrect calculations could lead to bad financial planning on the borrower’s part and may also cause them to repay the incorrect amount. Default payments can seriously affect a borrower’s financial health and must be avoided.

With the availability of online home loan calculators in India, there is no reason why a borrower should consider calculating the EMIs on their own. It is extremely convenient and leaves no room for mistakes. An online EMI calculator will provide you with a more in depth knowledge about your EMIs than a manually calculated one. They also can be calculated from anywhere in the world and completely simplify the process for borrowers.

As a home loan borrower, it is extremely important for you to have correct information about your EMI payments. There are several home loan calculators in India that are easily accessible. Try to make the most of it.