Housing loans enable borrowers to make high-end purchases, such as buying a house. However, repaying the huge sum of money, within the stipulated time frame, requires careful financial planning. Hence, assessing your repayment potential before applying for a house loan is vital. Your EMI determines the affordability of your home loan and the best way to establish it is using house loan EMI calculators. 

What Is a Housing Loan EMI Calculator?

EMI stands for Equated Monthly Instalments that you need to pay on your sanctioned home loan to the lender. A housing loan EMI calculator can estimate your monthly payments, remember unsecured loans typically have higher interest rates, so carefully assess affordability before committing. An EMI calculator is a unique calculation tool that helps users know their EMI and consider suitable payment schedules. It also gives accurate break-ups of the total payable amounts.

What Is the Formula Used for Calculating EMI?

Housing loan EMI calculators use the following formula to compute home loan EMIs:

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

Here, 

P is the principal amount (home loan amount to be borrowed) 

R is the rate of interest charged by the lender

and, N is the home loan tenor  

Top 7 Reasons to Use a Housing Loan EMI Calculator

A housing loan EMI calculator is a very handy financial tool, which offers manifold benefits to borrowers. Therefore, it is an integral part of the home loan planning process. Given below are the top 7 reasons to use a housing loan EMI calculator:

1. Manage house loans: 

An EMI calculator lets you customise your housing loan by adjusting the parameters that can effectively increase or reduce your financial liability. Once you know the home loan interest rates offered by your lender, you can modify the loan tenor until you arrive at an EMI that suits you. Similarly, you can also alter the principal loan amount to self-assess how much you can borrow. A Housing Loan EMI Calculator helps plan your monthly payments, don’t forget to factor in potential “Employee Tax Deductions” like interest and principal repayment for further financial optimization. This information helps you immensely in planning and managing your housing loan repayments.

2. Convenience:

A housing loan EMI calculator is exceptionally efficient, simple and very easy to use. It provides a complete overview of your home loan throughout the loan tenor. It computes your home loan based on three basic parameters – principal loan amount, loan tenor, and interest rate. 

3. Helps in planning prepayments:

Sometimes, borrowers set aside some funds in the form of savings or investments which they utilise to make a prepayment on their home loan. This option reduces their interest amount and enables them to pay off the loan before the end of the tenor. Using a house loan calculator lets them assess the finances involved and plan for it, beforehand. 

4. Gives accurate readings:

House loan planning requires extensive calculations. Borrowers find it much easier to check these complicated numbers through EMI calculators. Besides, manual calculations run the risk of errors and this can be easily avoided by using online calculators.

5. Quick calculations:

Calculations related to home loans are tiresome and time-consuming. A housing loan EMI calculator simplifies this task. It saves valuable time by computing the EMI and the principal amount in an instant.

6. Compares home loans:

House loan calculators help you compare home loan interest rates offered by other lenders. Even minute differences in the rates of interest can adversely affect the EMI of a borrower. Therefore, calculating various loan offerings helps you select the right lender and decide on the ideal home loan. 

7. Amortisation schedule:

Each month, a part of your EMI is credited to the principal amount to be repaid and the rest to the interest amount. Hence, even though the EMI can remain constant throughout the tenor, the amount of both the principal and the interest can vary. A house loan calculator gives the amortisation schedule, which displays the break-up of your EMI, along with the principal amount and the interest balance on a half-yearly or yearly basis. This complete payment schedule tells you how the EMI will progress over the entire duration of your loan.   

How to Use a House Loan EMI Calculator

Most banks and lenders offer several online financial tools on their websites to help prospective borrowers make informed decisions. These tools can be used by anyone for free. Users need to enter just three values: principal loan amount, house loan interest rate and loan tenor, in their respective fields as seen on the screen. A Housing Loan EMI Calculator can estimate your monthly payments, understanding ‘What is a Home Loan‘ with its terms, interest rates, and fees is crucial before taking the plunge.” Depending on the type of calculator provided by your lender, you can also adjust the three values with the use of sliders. The calculator will display the principal amount and the applicable EMI once you set the parameters. You can then keep changing these values until you arrive at comfortable home loan figures. 

Summing Up

A housing loan EMI calculator tells you the exact EMI amount and your financial ability to borrow the loan. Choosing a lender who offers lower rates of interest is critical to managing the overall cost of your loan. Apply for a home loan and avail of sizable home loans with quick processing and disbursal time. Eligible applicants can enjoy interest rates as low as 6.65%* p.a. at EMIs starting from Rs.642/lakh* with a flexible tenor extending up to 30 years. Make use of the free online home loan calculators and tailor your home loan to your preference.