A housing loan is often the first funding solution that an individual considers when planning to purchase a property. Availing such funds comes with a long-term financial liability that can have an adverse impact if not repaid timely. A 1 crore home loan EMI calculator aids in effective financial management by helping users determine their monthly repayments. Here is how individuals can benefit from its usage.
What are the benefits of using a housing loan EMI calculator?
Following is a list of benefits of using an online EMI calculator –
- Fast and accurate results: Manually calculating a 1 crore loan EMI can be time-consuming and leave ample scope for errors. An EMI calculator saves these hassles by delivering instant results in seconds. Also, individuals can never go wrong with their results using this online tool.
- Effective financial management: Getting an estimate of your home loan EMI beforehand can help you plan repayments more efficiently. One of the benefits of calculating EMIs before taking a home loan is that customers can adjust their tenor and loan requirement to ascertain that the resulting EMIs meet their repayment capacity.
- Quick comparison: Interest rates and other factors may differ across financial institutions, resulting in varying EMIs. Using a 1 crore home loan EMI calculator helps users determine and compare the repayment facilities offered by different creditors.
If you are a first-time homebuyer, read on to know the process of using an online calculator to enjoy the benefits mentioned above.
How to use an online EMI calculator?
Here is a step-by-step guide to using a housing loan EMI calculator.
Step 1: Enter your required home loan amount.
Step 2: Choose a repayment tenor you are comfortable with.
Step 3: Enter your preferred interest rate.
Upon completing the above procedure, the 40 lakh home loan EMI calculator will display your payment break-up results.
The calculator uses an EMI formula to compute the above results.
How does a home loan calculator work?
Mathematically, the formula to calculate home loan EMI is represented as:
EMI = P × r × (1 + r)n/((1 + r)n – 1)
Here, P equals principal amount borrowed, R stands for the monthly rate of interest, and n indicates your repayment tenor in months.
Manually calculating with such a complicated formula can lead to errors, especially for large loan amounts like Rs.1 crore. A 1 crore home loan EMI calculator, on the other hand, uses your inputs in this formula to provide instant and precise results.
Ways to reduce your home loan EMI
Potential borrowers can use a home loan calculator to determine their monthly repayments. At the same time, they can modify the factors affecting these payments to lower their EMIs in the following ways.
- Opt for a longer tenor
Housing loan providers offer long repayment tenors up to 20 years. Extending your loan tenor will lower your monthly EMIs and aid in comfortable repayment. However, note that a longer tenor also means paying interest for a longer time, which increases your total borrowing cost in the long run.
- Make a larger down payment
NBFCs generally mandate a 20% down payment. However, individuals can make a larger out-of-pocket payment to reduce total home loan requirement, and hence monthly EMIs.
- Maintain high eligibility
Having a steady income and a high CIBIL score gives borrowers the power to negotiate for lower interest rates. Know how your credit score can determine your home loan EMIs to understand its importance.
- Make prepayments
Try making lump-sum repayments with extra earnings like bonuses. This reduces your principal outstanding considerably, thus bringing down EMI payments.
If you are stuck with an existing housing loan with high borrowing cost, consider refinancing. Use a 1 crore home loan EMI calculator to opt for a lender offering lower interest rates and hence lower EMIs.
Consider additional charges affecting your repayment. Few financial institutions offer this facility without charges. They also extend pre-approved offers that can make availing the loans faster and easier. These offers are available on products like home loans, loans against property, etc. Check your pre-approved loan offer before applying with your name and contact number.
Settling the loan liability becomes significantly easier using the EMI calculator.