5 Reasons Why You Must Use An Emi Calculator If You Intend To Take A Home Loan

Most of us have to depend on loans to fulfil our dream of becoming home owners. However, since this loan is a high value loan that lasts for up to 3 decades, there is a good chance that one may not get the right deal on it, especially if one is not familiar with how these loans work. Now-a-days, it is possible to get a thorough understanding of the exact payable EMI amounts, thanks to a little tool known as the home loan EMI calculator. Here’s why you need to use this tool if you intend to take on a home loan.

You can predict your EMI amounts before the loan is sanctioned: An EMI calculator is the best tool that helps you accurately predict the loan EMI amount. It allows you to play around with different permutations and combinations of the principal loan amount, tenure and interest rate and computes the exact EMI amount, based on the figures entered. As a result, you can determine whether you can afford the home loan EMI, based on different interest rates and approach the lender, thereafter.

You can plan your finances accordingly: Most lenders have a requirement that you do not pay an EMI that exceeds 40% of your monthly income. They may reject your home loan application, if your EMI amount exceeds this 40% margin. However, you can manage this margin by increasing the loan tenure and plan your finances accordingly. Remember that home loans are available for tenures lasting up to 30 years. You can keep inputting different tenures in the tenure tab of the home loan EMI calculator until you arrive at one where you are not spending more than 40% of your income on EMIs.

You can select the right lender, tenure and loan amount: Every lender, whether it is a bank of housing finance company (HFC) levies a different interest rate on home loans. While some lenders offer loans for tenures of up to 20 years, a handful of them also offer 30 year tenures on these loans. Each lender also provides the online home loan EMI calculator on their website. Based on the interest rates levied by different lenders and the tenures offered, you can choose one that offers the lowest interest rate and the highest loan tenure.

The calculator helps you get your loan approved: If you approach a lender without adequate preparation and knowledge about the loan amount required, the interest rate offered, the duration of the tenure or even the costs associated with the loan, your loan could be rejected, especially if you can’t afford it. A rejected loan application in turn affects your credit scores. However, if you use the home loan EMI calculator in India, you are prepared for the EMI amount quoted by the lender. This way, you can accurately fill the loan application form by entering the loan amount that you can actually afford and get your loan sanctioned. Filing the correct loan amount increases your chances of getting your loan approved.

You can streamline your budget for purchasing the home: Every person has a different budget and a different requirement while purchasing a house. Knowing your monthly payable EMI towards your home loan, helps you define the budget for the home you can afford to purchase. It can also aid in narrowing down your house hunt based on your budget, thus saving a lot of time.

The home loan EMI calculator is a freely available online tool. You can find it on all lender websites and use it innumerable times until you arrive at an affordable EMI amount

Rudra Raghvan is an Mba student and financial advisor in Mumbai.he shares his financial experience and guides you about all your financial queries.