Potential borrowers should take into account a few factors before availing a home loan. It includes computing the installment using a loan EMI calculator to avoid unnecessary financial burdening during the repayment process.
Applicants need to take into account the following steps to plan their housing EMIs -
Step 1: Look into the offered rate of interest
The offered rate of interest has a substantial impact on the total of credit and hence on the EMIs to be paid. Opting for financiers that provide a competitive interest rate is thus considered essential.
Step 2: Decide upon the tenor of a loan
Since the calculation of EMI involves reverse compounding of interest, loan tenor has varying impacts on credit. Prospective borrowers can use a home loan calculator and key in the necessary details –
- Tenor
- Loan amount
- Rate of interest
Individuals need to tune the first two factors and evaluate an EMI that best suits their repayment capability.
Step 3: Reduce your current financial liabilities
Potential borrowers require checking their existing debt to income ratio and ensure that it is well within 50%. It reflects an improved repayment capability.
Step 4: Compare different financial institutions
As multiple reputed NBFCs and HFCs offer home loans, potential borrowers should compare all the available options.
Step 5: Check your CIBIL score
Although secured loans do not require a very high CIBIL score, possessing one gives borrowers the right to negotiate with the offered rate of interest. Consequently, there is a substantial lowering of the EMI amount. Thus, make sure to follow up on your current credit score and ensure it is at least 750.
Borrowers must use a loan EMI calculator to determine their monthly installments after considering the factors mentioned above.
