Home Loan Calculator

# How Does the Home Loan EMI Calculator Help Borrowers?

Last Updated : Feb. 7, 2022, 1:54 p.m.

Wondering how much will you pay to the lender on the home loan you avail from the same? Go no further than the Home Loan EMI Calculator, an online tool that helps you estimate the same. EMI stands for equated monthly installment that you need to pay in exchange for loans from banks and other financial institutions. Let’s know more about the Home Loan EMI calculator and its benefits below.

## What is a Home Loan EMI Calculator?

The Home Loan EMI Calculator calculates the installments based on the loan amount, interest rate and repayment tenure. All these variables play a critical role in your home loan EMI calculation. Let’s check the effect of all these below.

### How Does the Loan Amount Influence Your EMI?

The amount that you’ll be borrowing from the lender to buy your new home plays an important role in deciding how much you’ll be paying back to the lender. The EMI is directly proportional to the loan amount; the greater the loan amount, the greater the installments and vice versa. The loan amount you’ll eventually apply for will depend on the price of the property. Loans are offered up to 75-90% of the property price. Typically, loans up to INR 30 lakh, 30-75 lakh and above 75 lakh are offered up to 90%, 80% and 75% of the property price, respectively.

### How Does the Home Loan Interest Rate Impact Your Installments?

By providing you a lump sum amount for buying the house, the lender also needs something in return besides the loan amount i.e interest. And commonly the home loan interest rate is less compared to an unsecured loan. So, this is one plus point of a home loan. But did you know that the interest rate will be based on how much you earn and how you’ve fared while repaying your previous credits? To know the latter, the lender checks your credit score the moment you apply for a loan. The interest rate will be much lower in case you’ve got a good CIBIL Score . Inevitably, it will go up if your score is low. The loan amount also impacts the rate of interest; it remains the lowest for loans up to INR 30 lakh and goes up gradually with the rise in the loan quantum.

### Impact of Repayment Period on Your Home Loan EMI

Home loan runs for a far longer time compared to other loans. The reason being the loan amount usually remains much higher and makes it tough for borrowers to repay over a short period unless someone earns that much to do so. You can get a maximum of 30 years to repay the loan amount, subject to your retirement age.

Once you enter the above details in the home loan EMI calculator, it will generate your EMI amount. You can also check the graphical representation of your repayment. That will only help you plan your repayment better.

## Home Loan EMI Calculator Benefits

The Home Loan EMI calculator enables the following for customers –

### Easy & Precise Calculation

Buying a house is a big decision, and you can vindicate the same by estimating the EMI correctly beforehand using the calculator. Otherwise, the time-consuming manual calculations can always be erroneous.

### Fast Calculations

If you use pen and paper to calculate the EMI amount, it will take hours unless you’re a mathematician genius. However, with the home loan EMI calculator, you can perform these calculations by entering the desired values. You can keep changing the values to see which loan amount or tenure will suit you financially. So, calculate fast and save your precious time using the calculator.

Buying a home makes you feel good only when done with meticulous financial planning through the calculator. It will help you figure out the repayment estimate you are most comfortable with. As a result, you could choose the right loan amount and tenure to feel at home.

### Helps Plan Your Home Loan Prepayment

Using the home loan EMI calculator you can handle the EMI payments and decide the right time for prepayment. The prepayment means the payment of the loan before the scheduled close. By reducing the length of the loan, prepayment helps in curtailing interest payments too. You can thus look at the results of the calculator carefully to figure out the time by which you can accumulate enough to prepay. You can thus save regularly and accumulate the required sum for home loan prepayment . In case you could not accumulate enough, you can prepay partially too and save some interest.

### Effective Comparison of Home Loan Offers

You can use the home loan EMI calculator to compare loan offers of different lenders. Look to stitch a deal with the one with whom your repayment liability comes the lowest using the calculator.

### No Need to Share Personal Details

Many online tools, before answering the queries of customers, ask for certain personal details, except the home loan EMI calculator and alike. That may not raise security concerns but does invite spam calls or emails for loans that you may not appreciate. So, use the calculator to stay away from such unwanted notifications.

## Steps for Using the Home Loan EMI Calculator

To use the home loan EMI calculator, you need to go through the following steps –

• Visit the official website of the lender
• Click on the ‘EMI calculator’ option
• Enter the loan values
• Click on the ‘Calculate’ button

Home Loan EMI Calculator works on the below formula:

EMI Amount = [P x R x (1+R) ^N]/[(1+R) ^N-1], where P is the loan amount, R is interest rate, and N is the repayment tenure.

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