Understanding the basics is crucial if you consider taking a mortgage loan in India. When you borrow funds, you must understand how much you need to pay each month, the other charges involved in the borrowing process, and more. One tool that can help you here in your financial planning is the Mortgage Loan EMI Calculator. Let us explain everything you need to know about it in simple terms.
What is an EMI Calculator?
The Mortgage Loan EMI (Equated Monthly Installment) Calculator is a handy tool that helps you estimate your monthly loan repayments. It takes into account key factors like the loan amount, interest rate, and tenure, providing you with a clear picture of what to expect each month. However, the downside of using them is they do not consider other charges associated with your borrowing.
Breaking Down the Factors:
1. Loan Amount:
The first input you will need for the EMI calculator is the loan amount. This is the total sum you’re borrowing from the bank. The calculator uses this figure to determine your monthly repayments. Keep in mind that a higher loan amount means higher EMIs.
2. Interest Rate:
The interest rate is the percentage charged by the bank on the loan amount. It plays a significant role in determining your EMI. A lower interest rate means lower EMIs, and vice versa. When shopping for a mortgage, aim for the best possible interest rate to save on your monthly payments.
3. Loan Tenure:
The loan tenure is the number of years over which you will repay the loan. It directly affects your EMI – a longer tenure typically results in lower EMIs, but you end up paying more in interest over time. On the other hand, a shorter tenure means higher EMIs but less interest paid in the long run.
How to Use the EMI Calculator?
Step 1: Input the Loan Amount:
Start by entering the total loan amount you are looking to borrow. Be realistic and only borrow what you genuinely need.
Step 2: Specify the Interest Rate:
Enter the interest rate offered by the bank. Shop around for the best rates to get the most favourable terms.
Step 3: Set the Loan Tenure:
Choose the number of years you want to take to repay the loan. Consider your financial situation and choose a tenure that aligns with your goals.
Step 4: Get Instant Results:
Once you have entered these details, hit the calculate button. The EMI calculator will instantly provide you with the monthly repayment amount.
Understanding the Results:
The EMI calculator generates a detailed breakdown, showing your monthly payment’s principal and interest components. This breakdown helps you understand how much of your EMI goes towards repaying the actual loan amount and how much is allocated to interest.
Why Use an EMI Calculator?
1. Financial Planning:
The home loan eligibility calculator allows you to plan your finances effectively. By knowing your monthly repayment in advance, you can budget better and avoid any financial strain.
2. Comparison Shopping:
When exploring mortgage options, use the EMI calculator to compare different loan amounts, interest rates, and tenures. This empowers you to make an informed decision based on your financial capacity.
3. Avoid Surprises:
Knowing your EMI beforehand prevents any unexpected financial shocks. It ensures that you are well-prepared for your monthly financial commitments.
Conclusion
The home loan prepayment calculator is a simple yet powerful tool that can greatly assist you in your home-buying journey. You can make informed financial decisions by understanding the factors that influence your EMI and using the calculator wisely. Remember, a mortgage debt is a long-term obligation, so take the time to crunch the numbers and find a plan that suits your pocket. Happy home hunting!
