Make your Financial Planning Easy with Home Loan Calculator
Nishant Vivek 02 May 2019
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With the long-term growth in the prices of property, investing in the one is a good idea from both an ownership and investment perspective. You can fulfil your dream of owning a home by availing a home loan. The amount that you pay your lender against your home loan is called your EMI. To take the efficient financial decisions and plan your repayment in advance, use an EMI calculator. This online tool, also known as a home loan calculator can help you make calculating your EMIs easier, and also help you choose the right tenor and loan amount to suit your income.
 
What is a Home Loan Calculator?
 
With a Loan EMI Calculator, you can calculate the interest amount and the EMIs you have to pay against your home loan. The formula used to calculate your EMI is:
 
A = [P x R x (1+R)^N]/[(1+R)^N-1], where P is the amount of loan, N is the number of monthly instalments and R is the current home loan interest rate per month.
 
For instance, say you have availed a home loan of Rs.20 lakh for 5 years at 10% per annum interest. According to the formula, you will arrive at the EMI amount of Rs.42,494. While doing this calculation manually is difficult and prone to errors, an EMI calculator can give you the figure in an instant. Additionally, this calculator will also reveal your total interest as Rs.5,49,645.
 
How does a Home Loan Calculator Help in Financial Planning? 
  • It Helps You Forecast your EMIs
    As mentioned in the above example, a home loan EMI calculator helps you forecast your monthly EMIs quickly and accurately. This will help you to plan your monthly expenses efficiently.
     
  • It Helps You Choose the Right Lender and Loan Amount
    Using this calculator, you can compute the EMI for different offers by various lenders and choose the one that best suits your financial capabilities. For instance, say that lender A offers you Rs.20,00,000 loan for 5 years at 10% rate of interest while lender B offers you Rs.20,00,000 for 6 years at 9% rate of interest. You can use the EMI calculator to know that EMI for lender A is Rs. Rs.42,494 and the EMI for lender B loan is Rs.36,051 while the total interest you pay for lender A is Rs.5,49,645 and that for Lender B is Rs.5,95,680. Considering these results, you can choose to avail a loan from lender B if you cannot afford higher EMIs or A to save on paying additional interest.

    Similarly, you can try various interest rate combinations to see which lender’s loan is the most affordable. This calculator can also help you change the loan amount you want to borrow, which can help you find the right home too. For instance, if you see that a loan of Rs.20 lakh is not working out for you even with the lowest interest and highest tenor, you can decrease the principal and do our calculations accordingly.
     
  • It Helps You Choose the Right Tenor
    Using the EMI calculator, you can choose the most affordable tenor for your home loan. When you prefer to pay higher EMIs and can afford to do so, you can opt for shorter tenor, but if you wish to pay lower EMIs, you can choose longer tenor to repay your loan. In the given example, if your loan tenor is changed to 4 years, it will increase your EMI by Rs.7,801. This is how you can choose the right tenor with the help of EMI calculator. 
 
Thus, an EMI calculator is an indispensable tool for any prospective homeowner, and helps you compare the various home loan offers with ease. If you are looking to take a new home loan by doing a balance transfer, you can use a balance transfer calculator to see how much you stand to save with lower interest rates.
 
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