Home loan buyers planning to apply for a home loan very often come across these lines during their research: home loans are a long-term commitment and therefore, one must avail of these loans after careful consideration and planning. Though these lines are repeated often, they are also very true. Home loans easily last 20 to 30 years. During this time, a considerable portion of your monthly income will go towards covering your loan EMIs. If you take on the burden of loan EMIs that you find difficult to repay, repaying the home loan itself will become a huge burden. Home loan borrowers are, therefore, advised to use a home loan EMI calculator while planning their home loan journey.
What is a Home loan EMI calculator? A home loan EMI calculator is an online tool that borrowers can use to figure out their EMI liability for the loan amount they wish to borrow for their desired loan tenor. The housing loan EMI calculator is easily available online and is quite an easy to use tool. To use this tool, one must enter only three values: the home loan amount they wish to borrow, the loan tenor that they think would work best for them and the rate of interest they are being offered. As soon as a borrower enters these three values, the housing loan EMI calculator gives them their tentative EMIs.
Apart from this, certain home loan EMI calculators also give borrowers their amortisation schedule as well as their total interest outgo on the loan. The home loan calculator is a handy tool that helps borrowers make right decisions regarding home loans, plan their home loan repayment journey in advance and make right decisions regarding how to achieve financial freedom. Let us now look at the benefits of a home loan EMI calculator and understand how this tool can help one achieve financial freedom.
Benefits of a Home Loan EMI Calculator: Here’s How This Tool Will Help You Achieve Financial Freedom
1. The Home Loan EMI Calculator Helps You Decide the Right Loan Amount and Loan Tenor for You
The biggest benefit is that the home loan calculator helps a borrower decide what would be the right loan amount and loan tenor for them. The home loan calculator gives borrowers their tentative EMIs and by looking at the EMI value, it becomes quite easy for a home loan applicant to gauge whether they can afford the loan amount they wish to borrow. If the EMI value seems high, home loan applicants can either lower the loan amount or increase the loan tenor to bring the EMI into a range that seems affordable. Home loan applicants can do these calculations manually as well but not only are manual calculations time-consuming and tiring, they are also prone to errors and when it comes to a long-term and huge commitment such as a home loan, one cannot afford to make mistakes.
2. It Helps Borrowers Compare Loan Offers and Choose the Right One for Them
Home loan borrowers are advised to not choose the first loan offer that comes their way. Instead, they must do thorough research and talk to as many lenders as possible as this will help them avail themselves of the best home loan deal. When a home loan borrower talks to many different lenders, they get offered different home loan deals. Using a home loan EMI calculator, home loan borrowers can compare offers from various lenders and settle for the one that’s best for them.
3. It Saves Home Loan Borrowers from Late Fees and Penalties
The home loan EMI calculator helps home loan applicants figure out the loan amount they can easily repay. When borrowers borrow money within their budget and keep their EMIs affordable, not only does the task of home loan repayment become less burdensome but the home loan borrower also gets saved from having to pay penalties and late fees in case of missed EMI payments or EMI default.
4. It Helps Borrowers Decide the Right Time for Prepayments and Foreclosure
Though most home loan borrowers opt for a loan tenor of 20 to 30 years, they want to become debt-free as quickly as possible. Thus, most home loan borrowers make prepayments whenever possible and some foreclose their loan if they can before the agreed loan tenor. However, if one wants to reap maximum benefits, they must choose the right time for prepayments and foreclosure. Ideally, home loan prepayments must be done during the early years of loan tenor when the interest component of the loan is still high. The same goes for foreclosure. Apart from helping home loan borrowers figure out the right time for prepayment and foreclosure, the home loan EMI calculator also helps borrowers understand how prepayment and foreclosure will affect their home loan EMIs and tenor and decide if this option would be a good option for the borrower or nor.
Final Words
A home loan is a huge responsibility and a big decision. It is a decision that will have a major impact on the way you live. Therefore, anyone opting for a home loan must initiate the home loan application process after weighing in the pros and cons and gaining a full perspective of the responsibility they plan to take head on. Home loan borrowers must also use a housing loan EMI calculator to get an understanding of the home loan amount they can borrow and the EMI they can repay comfortably. They must also use the calculator to choose the right loan offer for them and plan prepayments and foreclosure in a smart way.
‘This article is part of sponsored content programme.’
Source: thehindubusinessline.com