How to use a Home Loan EMI calculator?

A home loan EMI calculator is a fascinating tool that helps in financial management. Read on to know everything about it

You can avail of a home loan from a bank or non-banking financial corporation (NBFC) and grow your real estate portfolio. Home loans are one of the most requested forms of loans. The reason is simple: home ownership is a great way to improve your life and supplement your investments. Having a house saves you money as it removes the need for renting a place. You can also use your house as a collateral and fund your financial obligations.

A particular interest rate would be charged by the bank or financial organisation. The principal and interest portions of the home loan EMI are both fixed for the duration of the loan.

What is a home loan EMI calculator?

The home loan EMI calculator is a simulator that helps calculate the EMIs on your home loan. The monthly EMIs are calculated using a home loan EMI calculator. It factors in the principal, interest, and loan term.

The home loan EMI calculator consists of a box with three sliders. One of them is the ‘Home Loan Amount,' while ‘Home Loan Tenure' and ‘Rate Of interest' are the other two. Once you have entered your information, you will see how much housing loan EMI (Equated Monthly Instalments) you must pay the bank each month to repay the house loan within the chosen term.

How to calculate home loan EMI?

The following mathematical formula can determine your housing loan EMI:

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

P stands for 'Principal Amount,' which is the amount you borrow from the bank. R represents the bank's interest rate, while N is the years the loan has been taken out for. Because EMIs are paid monthly, the length is computed in months. Changing any of the three parameters changes the home loan EMI.

What is pre-EMI interest?

If you take a portion of the loan, you must pay interest in the amount received until the entire loan is taken out. This interest is referred to as pre-EMI interest (PEMI), and it is paid monthly until the final transfer of funds, after which the EMIs begin.

What are the benefits of a home loan EMI calculator?

There are countless benefits of using online EMI calculators, such as IDFC FIRST Bank’s EMI calculator. Some of them are:

Simple process

Only the loan amount, interest rate, processing fee, and tenure must be entered. The calculator uses these for the actual calculation.

Mortgage costs overview

This tool can help comprehend the financial expenses linked with your EMI, such as the interest due and transaction fee value. Understanding the actual value might help you comprehend the exact cost of the loan, because banks and financial institutions present them as a proportion of the loan amount.

Analyse loan offers

The loan calculator can compare loan offers from different institutions. The cost of each loan and their corresponding EMIs are displayed in the results. It helps in determining the most viable choice.

Select the tenure

The home loan EMI calculator assists you in selecting the loan term. You can choose a shorter loan length and pay off your loan sooner if you can afford to cover a higher EMI. Alternatively, you can pay a more manageable EMI and extend the term of your loan.

Validate data

If you are negotiating a home loan with a bank, you can double-check the repayment plan it gives. You can double-check this using the payback column information from the calculator. Remember, the figures may vary from time to time. This is because creditors may factor up other fees and costs while calculating your EMI.

Aids in debt management

You may have some additional funds to make prepayments when paying your EMIs. The home loan EMI calculator can help you go over your finances again and see how prepayments can aid you pay back the mortgage before the term finishes.

If you are thinking about getting a house loan, you can look at IDFC FIRST Bank’s website or instant loan app and learn about what they are offering. Whether it is a ₹15 lakh home loan EMI or a personal loan for ₹2 lakhs, you will get the most reasonable rates of interest from the bank.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision