First-time homeowners may often feel nervous taking the big step of applying for a home loan. While it indeed is a big decision, proper financial planning can help make the process seamless. One of the best ways to properly plan your monthly outflows towards home loan EMIs is to use a home loan calculator, also known as an EMI calculator.
These calculators have several user-friendly features that can help you plan out different financial scenarios. This not only helps in choosing the right home loan, but also helps plan ahead for times of financial uncertainty.
What Is a Home Loan Calculator?
A home loan EMI calculator is an online tool that you can use for free to calculate the amount of Equated Monthly Instalments (EMIs) you would have to pay for a home loan. To use this calculator, all you need to do is decide upon a loan amount, check the home loan interest rates offered by different banks and non-banking financial companies (NBFCs), and finally, decide upon a loan repayment tenure.
After entering the above-mentioned information into a home loan calculator, it will give you the corresponding EMI amount. By adjusting the values of loan amount, interest rate, and loan tenure, you can see the difference in the resultant EMI amounts. This can be helpful for a variety of use cases.
Why Should You Use a Home Loan Calculator?
Since taking out a home loan is a big financial decision, it is always better to do the math beforehand. A home loan EMI calculator can help with this. Most home loans last for up to 10 to 20 years, making them a long-term investment. To finance such high-value purchases for a long period, it is necessary to know beforehand your monthly outflow towards EMIs. A home loan calculator can help you do this and much more.
1. Helps You Stay Within Budget
Firstly, an EMI calculator for home loans can help you stay within your monthly budget. By estimating the amount of your monthly income that will need to be reserved for home loan EMIs, you can better plan your budget around this expense. This also lets you remain stress-free that your EMIs are perfectly within your monthly budget, and you do not need to overspend just to avoid defaulting on EMIs. Moreover, by preventing repayment defaults, you can maintain a good credit score.
2. Compare Different Loan Offers Easily
One of the best features of a home loan calculator is the ability to compare and contrast home loan offers from different lending institutions. You can do this by checking the interest rates from different lenders (whether banks or NBFCs). Next, you need to keep the same loan amount and loan tenure and keep changing the interest rates each time you calculate the EMI. This will give you the exact EMI amounts you would have to pay if you take the home loan from any of these lenders.
3. Plan for the Future
Another way to manage your monthly outflows towards EMIs using a home loan calculator is to recalculate the resultant EMI after making partial repayments. This can help you plan for the future. Moreover, partial repayments reduce the loan amount, and a new EMI is calculated based on it. Therefore, it can also effectively help you reduce your monthly outflows towards EMIs. An EMI calculator can calculate these changes in EMIs easily. As a result, you can now better manage your home loan repayment schedule.
4. Easy to Use Anytime
A home loan calculator is readily available online. You can use it whenever and wherever. This means you can use it on your desktop, laptop, tablet, and even smartphone. It is also quite user-friendly, with easy-to-use sliders for adjusting the values of loan amount, interest rate, and loan tenure. So, if you need to recalculate your EMIs based on a new loan amount, a different shorter or longer loan tenure, or different interest rates, you can now easily do it even on the go with a home loan EMI calculator.
Final Thoughts
Taking a home loan is a smart way to buy a house, but it comes with a big responsibility. You need to be sure that the monthly EMI won’t hurt your finances. A home loan calculator helps you understand your monthly outflow clearly. It lets you compare options, adjust plans, and choose what works best for your needs.
