Taking a home loan is a big decision, as it is the gateway to achieving your dream of owning a house and making one of the biggest investments of your life! You must consider various factors before you apply for a home loan, from choosing your home loan provider to evaluating the loan amount and tenure.
To help make these informed decisions, you must use an indispensable digital tool – a home loan calculator. It is a financial tool that lets you plan your home loan smartly. Here we will look into how you can use one prudently and how it helps you make the best decisions regarding your home loan!
How Does Home Loan Calculator Work?
A home loan calculator is a free financial tool that is easily available on the web. It helps you analyse your monthly EMI payable towards your home loan, the total interest charges you would be paying, and the amortisation schedule, which helps you understand the payment of principal and interest proportion each month through EMIs. Some of the key features of a home loan calculator are:
- It is free of cost
- It is available 24/7
- It gives you results within seconds
- It guarantees 100% accuracy and 0% error in calculation
- It saves time by eliminating the need for manual calculations
- It is simple and easy to operate
- It uses the formula – [P x R x (1+R)N]/[(1+R)N-1] = EMI
Where
P = Loan amount
R = Rate of interest offered by the loan provider
N = Loan Tenure
How Does a Home Loan Calculator Help You Make Wise Decisions?
A Home Loan Calculator can help you make smart decisions about your home loan in various ways:
Compare Financial Institutions
The biggest advantage of using a home loan calculator is comparing the interest rate offers from different home loan providers and finalising the right one. You can use various permutations and combinations on the calculator to ascertain which financial institution is the right option.
Choose the Right Home Loan Tenure
The higher the loan tenure, the lower the EMI amount; however, the interest charges payable would be higher. Considering your needs and preferences, you can settle for the right loan tenure. If you want lower interest charges, you can reduce the home loan tenure and pay off the home loan fast.
Choose the Right Home Loan Amount
You can finalise the home loan amount using the home loan calculator. For example, if you want to reduce the calculated EMI or interest charged on your home loan, you can simply increase the down payment amount and reduce the home loan principal amount. This can help you reduce your interest charges and monthly EMI.
Breakdown of Financial Charges
The home loan calculator helps you with an amortisation schedule, which gives you an idea of the proportion of interest and principal amount, you are paying each month through EMIs. It also helps you assess the home loan processing fee and compare financial institutions based on such fees and other hidden charges.
Manage Your Home Loan Proficiently
EMI calculator helps in loan management, as you can decide on the prepayment of home loan calculator based on the remaining monthly EMIs. Your home loan calculator can help you understand how home loan foreclosure can benefit you before the tenure ends.
Thus, you can manage and plan your financial health better.
Conclusion
Now that you know how a home loan calculator can help you, you must use it before filling out the application. It will help you assess financial parameters regarding your home loan and get you the most lucrative deal!
