While planning to buy a house, one of the most important factors that you would need to decide is how much loan amount do you require? The key aspect that you need to consider is your EMI amount and if you would be able to afford that based on your current monthly income. Here comes the use of a home loan EMI calculator which you can use to calculate EMI on your loan.
Using a home loan EMI calculator would help you to know your EMIs in advance so that you may afford your loan and pay it quickly.
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So, before calculating your home loan EMIs, you need to have a basic idea of what home loan EMI calculator is and how does it work?
What is a Home Loan EMI Calculator?
A home loan EMI calculator is a useful financial tool that helps you to know the amount of the EMIs that you will need to pay towards your housing loan. Using the calculator enables you to make an informed decision.
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To calculate your home loan EMIs, you need to enter the below-mentioned details in the home loan EMI calculator-
1) The loan amount you wish to take
2) The repayment period
3) The rate of interest
What is Home Loan EMI?
EMI stands for Equated Monthly Instalment. Housing loan EMI is the amount which a borrower needs to repay to the lender within the specified loan tenure.
How to calculate EMI on your home loan?
You should know how much you would be paying as your monthly installment to your lender. The EMI on your loan is calculated based on the combinations of the factors, i.e., principal amount, rate of interest, and loan tenure.
Formula to calculate EMIs-
To calculate your home loan EMIs, you can use this mathematical formula-
EMI = [P x R x (1+R) ^n] / [(1+R)^ n-1]
In this formula-
E stands for EMI, P means for principal, R means the rate of interest. N indicates the tenure of the loan.
Using a home loan EMI calculator will give you a fair idea of how much amount you would be paying to your lender in monthly installments. Also, you would know whether you can afford your loan or not.
Benefits you will get using a home loan EMI calculator-
A home loan EMI calculator is a beneficial tool that not only helps to calculate your loan EMIs in advance but also enables you to make a better and informed decision. Have a look at some of the benefits offered by home loan EMI calculator-
1) Using a home loan EMI calculator will save your time as you will be able to calculate your EMIs in seconds by using a formula mentioned-above.
2) You will instantly get accurate results after putting the details like loan amount, tenure, and the rate of interest. Manual calculations may give wrong results which can change your house loan EMI.
3) It also helps you plan your finances in advance so that you don’t face any financial crisis later on, as you know how much do you need to pay each month.
So, using a home loan EMI calculator is strongly recommended if you are planning to opt for a home loan to own your dream house.