Figuring out the optimal home loan EMI that works for you in the long run, is indeed a massive challenge. Use the online EMI calculator and simplify your home loan choices.
Purchasing a home is one of the biggest financial decisions you may take in your life, and it’s crucial that you do it right. While availing home loans, you generally borrow a substantial amount, usually running in tens of lakhs from a lender. It’s essential that you repay this sum as quickly as possible so that you can reduce your home loan.
Here, in this post, you can find out how to choose the right EMI that helps you to repay your home loan quickly, without overstraining your budget.
What is Home Loan EMI?
When you avail a home loan, you repay it as EMIs (Equated Monthly Instalments). This is a fixed sum that you repay every month. The EMI includes both the principal as well as the interest component.
While a longer tenure may help in reducing the EMI, a shorter tenure helps you to repay your home loan quickly. Having said that, if you choose a very short tenure, then your EMIs are higher.
How is the EMI Calculated?
The EMI is calculated using the following formula,
EMI = [P * R * (1 + R) ^ N] / [(1 + R) ^ N -1]
Here, P is the Principal Amount (the loan amount)
R is the interest rate charged on your loan amount
N is the tenure of the loan (number of years)
Calculating the EMI of your home loan manually is a tedious task. This is where a home loan EMI calculator helps in assessing the monthly outflow of your home loan easily.
What does the EMI calculator do?
The online EMI calculator is a tool that helps you to find the optimal EMI. It’s a simple slider, with three input values – the loan amount, interest rate and preferred tenure.
By playing around with the values for each of these sliders, you can find the right home loan EMI that fits your monthly budget.
Factors that Affect Home Loan EMI
Apart from the three main factors:
Principal amount – the higher the loan amount availed, the higher is your EMI.
Tenure – the longer the tenure, smaller is the EMI and vice versa.
Interest rates – the rate of interest has a direct impact on your home loan EMI.
Why use an EMI Calculator?
An EMI calculator is a handy tool that makes it easy to determine the right home loan for you. All you have to do is use the slider, play around with the three values, and you can get a clear picture of your overall loan amount – the principal you borrow, the overall interests you pay, etc.
This helps you budget your finances ahead of time, and plan cash flow accordingly to repay your loan, without any financial stress. So, go ahead, use an online EMI calculator to get a clear picture of your home loan.