Simple Steps to Calculate Home Loan EMI

After the RBI decided to keep the repo rate and reverse repo rate unchanged for 2021, the demand for home loans increased significantly. The home loan market witnessed a rise of 16% over the last six years.

Some NBFC’s have experienced a growth of 75% in home loan disbursals due to competitive interest rate, flexible tenor and lucrative schemes. This growth can be attributed to several factors, including the availability of tools like a home loan calculator that facilitate computing home loan EMIs and optimise the borrowing process. This calculator helps borrowers gauge their repayment capacity and offers an accurate EMI amount that a home loan borrower is supposed to pay.

This calculator may vary in functions as per different financial lenders, but the standard parameters such as interest rate, loan tenor remain the same. The monthly instalments can be calculated manually, but the process gets quite complicated. Hence, this calculator is specifically offered to allow potential customers to make an informed decision.

Methods of using the calculator

To understand the functionality of a home loan  calculator, an individual needs to understand the mathematical equation first. Generally, financial lenders follow a specific mathematical formula to calculate the home loan EMI.

EMI- P x R x [{(1 +R) ^ N} / {1- (1+R) ^ N}]

In the above formula, P represents the principal loan amount, N signifies monthly instalment, and R represents interest rate. With this formula, one can quickly calculate his/her EMI outgo without any error.

Some financial lenders also offer home loan interest calculator to have a fair idea about the interest payable and calculate the EMI amount accordingly.

Using a home loan calculator is relatively easy and hassle-free. All you need to do is follow few steps –

Step 1: Visit the official website of any HFC.

Step 2: Search for a “home loan calculator online”.

Step 3: Insert necessary details like the loan amount, tenor and interest rate.

Step 4: Check the EMI amount that will appear on the screen, along with an interest rate payable on the amount.

Benefits of using a home loan calculator

The said financial tool offers a host of benefits, as discussed below

  • High accuracy

This calculator is highly beneficial for first time home loan borrowers. Since the application is quite efficient and uncomplicated, applicants would not find any difficulty using it and can avail accurate and error-free results. Moreover, they can calculate the home loan EMI sitting at home before applying for a loan. This can also help prospective applicants to find and compare lenders offering the best home loan interest rate.

  • Simple calculation

Borrowers who wish to determine the exact EMI of their loan amount will need to insert the three primary metrics such as loan amount, tenor and interest rate. The calculated result will be displayed within seconds.

  • Choosing right tenor

After getting a fair idea about the EMI amount, applicants can choose their suitable loan tenor. They can make an informed decision about how much loan EMI they afford and select a short or extended tenor accordingly.

  • Comparing lenders

A borrower can use this calculator to compare different financial lenders. The results will display the total cost of the loan along with respective EMIs. This will allow individuals to select the suitable option that will match their specific requirements.

Nonetheless, individuals must check the eligibility parameters before proceeding with the loan application. Some reputed HFCs offer 1 crore home loan EMI or more along with exclusive pre-approved offers that make this loan application process swift and straightforward. These offers are levied on financial products like loan against property, home loan and more. You can check your pre-approved offer by submitting your name and contact details.

Hence, this calculator can aid borrowers to access better deals and effectively plan out their finances to make timely payments.

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