Juliet D'cruz

# 10 Things You Must Know About Home Loan Emi Calculator

Everyone dreams of owning a house. But finance is the hurdle in the path of fulfilling your dream. It is where a home loan provides you with the financial support to buy a new house, and in return, you have to pay the EMI to the lender. While you borrow the amount, be aware of how much EMI you will have to pay. Whether it is in line with your repayment capability or not? So it helps you to plan your finance correctly to make your journey of home loan process a stress-free journey. Here, the home EMI calculator comes into the picture. It will help you to calculate your loan EMI, and you can make decisions accordingly.

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## What is home loan EMI?

A home loan is an amount you borrow from a financial institution and use that fund to buy a house. In return for this, you will have to timely pay the EMI to the lender. The home loan EMI includes the principal amount and the interest that you have to pay on the amount for a specified time period, and the interest rate is fixed for the entire tenure of the loan.

## What is a Home loan EMI calculator?

Most finance companies provide you with an online EMI calculator. The home loan EMI calculator is an arrangement that will help you to calculate the amount of EMI that you need to pay for your home loan. EMI is calculated based on the interest rate, the principal amount, and the tenure of the loan.

The calculator has a box with three sliders. These sliders are loan amount, loan tenure, and interest rate. You need to fill in the details of all these three sliders in order to calculate the EMI.

## How does the Home loan EMI calculators work?

The mathematical formula that is used to calculate the home loan EMI amount is :

EMI amount = [ P x R x (1+R) ^ N ] / [(1+R) ^ N – 1]

Here P, R, and N are the variable numbers, and the EMI value depends on the value of these variables.

The variables are explained below:

P is the principal amount. The principal amount is the amount the bank lends to you as a loan, and the interest rate is applied to this amount.

R is the interest rate that the bank applies.

N is the tenure for which the loan is borrowed. However, as the EMI is paid monthly, the tenure is considered in the number of months.

Now, suppose an individual borrows a loan of Rs. 50 lakhs and the average interest rate is 12% for a tenure of 10 years, then

P is 50 lakhs

R is 12%

N is 10

These values are placed in the above-mentioned formula, and EMI is calculated.

## 10 Things to know about the home loan calculator

The ten things that you should know about the house EMI calculator are as follows:

1. The House loan EMI calculator is a self-guided tool that guides you through calculating your equated monthly instalment (EMI) single-handedly.
2. House EMI calculator works as a home loan eligibility calculator, also calculates your EMI, and informs you about the value of your property that can be financed.
3. The formula used by the EMI calculator is

EMI amount = [ P x R x (1+R) ^ N ] / [(1+R) ^ N – 1]

Here P = Principal amount

R = Interest rate

N = Number of years

1. In addition to your personal and professional details, you also need to provide some basic information, like the amount that you want to opt for as a home loan, the tenure for your repayment of the loan, and the value of the property. With these basic pieces of information, EMI can be calculated with the help of a calculator.
2. Home loan EMI calculator online is available on the website of all financial institutions, whether banks or NBFCs.
3. The advanced home loan calculators consider the current loan EMI, local and state taxes, and insurance.
4. The information provided by you can be tracked in the loan agreement.
5. You get to know your Amortization schedule with the help of the EMI calculator. An amortization schedule lets you know about the segregation between paying off the principal amount and the interest that you need to pay on your monthly EMI and also lets you know about the leftover amount of the loan at month’s end.
6. It has to be noted that EMI is calculated based on the fixed interest rate. So in the case of a floating interest rate, the value of EMI fluctuates based on the existing market rates and fluctuation in the base rate.
7. By utilizing the house EMI calculator, you can know the values and make out which home loan package is more suitable for you.

## Advantages of the House Loan EMI Calculator

The EMI calculator lets you know the monthly EMI that you will have to pay on your home loan even before applying for the loan. This information will further help you to decide:

• The amount that you can borrow for your home loan.
•  The tenure of your home loan, whether short-term or long-term loan.
• The downpayment amount that you can pay.
• A financial plan can be formulated in order to be sure about the timely payment of the EMIs.
• It helps you to compare the loan packages of multiple financial institutions and make an informed decision about the lender.
• The home loan EMI calculator helps you to know about the interest that you will have to pay and the amount that will be deducted monthly.
• It guides you to decide about the tenure of the loan, whether it should be increased or decreased, and whether to reduce or increase your EMI based on your current income.

Thus, those as mentioned above are some things that you should be aware of when you plan for a home loan, as the home EMI calculator will help you in your decision-making process while selecting the lender for your home loan.

Charlotte Miller

Charlotte Miller

Charlotte Miller