Learn about the components in a home loan EMI calculator

Banks and financial institutions provide various tools to aid you in your home loan application process. They help you ascertain your home loan eligibility and equated monthly instalments. You also use them to compare lenders and their offers as they come pre-adjusted based on lenders’ policies.

One of the valuable tools you get is a home loan calculator. It allows you to know the equated monthly instalments in advance to plan your loan application. It is a simple and accessible instrument that gives you accurate calculation within minutes. However, you should input the data correctly to get precise results. You do this by learning about it before using it.

Here are the components you should know about:

Variables:  You see a box with three elements that you input for calculation in the home loan EMI calculator. This data affects the EMI amount considerably. Hence, make sure to consider and plan what you want before using it. The elements are as follows:

Loan amount: Lenders generally offer about 80-85% of the property valuation to borrow. The rest is your contribution by way of a down payment. It also depends on your income as EMI is subject to a limit of up to 50% of your earnings. Ensure the property is valued beforehand with all the costs before inputting the data into the tool.

Interest rate: Lenders have varying home loan interest rates depending on their policy and offers. These rates get calculated based on various parameters like your credit score, age, repayment capacity, employment status, etc. You get to compare them accurately by using the EMI calculator for home loan on different lender websites.

Loan tenure: This is an essential factor that decides the spacing out of your EMI. If you choose a shorter term, you get a higher EMI and vice versa. Lenders usually would compensate for your efforts to pay off the loan faster by charging lower interest. Your age is also a determinant in deciding the loan duration. It is best to consider these aspects before selecting the period.

Payment breakup:  The EMI calculator home loan gives you detailed results showing the EMI amount payable. You get a breakdown of the principal amount and total interest to make things clearer. This way, you know how much of your EMI is going towards the interest and borrowed amount. You get charts or graphs for visualisation of the same. There is no room for confusion that usually comes with manual calculation.

Amortisation table: This is yet another aspect of the housing loan EMI calculator. It differs from lender to lender. It is a table that gives you a comprehensive representation of what your upcoming years of loan repayment look like.

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