A home loan is a type of secured financing option that one can avail to acquire the funds for house purchase. However, before applying one should know the EMI calculations for home loans to estimate the installments and make an informed decision.
The formula to calculate loan EMIs is [P X R X (1+R) n] / [(1 + R) n – 1],
Where,
- P = Principal amount
- N = Tenor expressed in months
- R = Rate of interest
One can also home loan EMI calculator to compute EMIs that he/she is required to pay to a lender. Borrowers thus need to input the following data to calculate the installment amount –
- The loan amount that they want to avail
- Home loan interest rates charged by a lender
- Repayment period
Based on these details, the house loan calculator will display the total interest payable, the total amount due to the lending institution as well as the EMI amount. Borrowers can also customise the values to arrive at an EMI amount that meets their financial needs.
There are several benefits of using a home loan EMI calculator like -
- This tool allows a borrower to calculate the accurate EMI needed to pay throughout his/her chosen tenor.
- Borrowers can use the calculator to compare interest rates offered by different lenders to select an affordable EMI option.
- The repayment period significantly affects the home loan EMI amount. For instance, extended tenor results in lower EMI and shortened repayment period means a high EMI amount. Users can thus use this calculator to choose a loan tenor that is most convenient for them.
Thus, before applying for a home loan, one should use the home loan EMI calculator to make a borrowing decision that fits his/her repayment capacity.
Also Read: Tips to Efficiently Manage Housing Loan EMIs
