Benefits of Home Loan EMI Calculator
Understanding the EMI is critical whether you have already borrowed funds for a house purchase or are looking for lenders to assist you in financing your property. If the EMI is not pocket-friendly, you may end up delaying or skipping payments, which will lower your creditworthiness. EMI calculators play an important role in avoiding such circumstances.
Advantages of Home Loan EMI Calculator
1. Easy calculation
Home loan EMI calculator simplify EMI calculation. However, if you had to calculate the monthly obligation on your own without a tool, you would use the following calculation.
Gold Rate
Friday 17 Jan. 2025
P x R x (1+R)^N / [(1+R)^N-1]
Where-
P = Borrowed sum
N = Loan tenure in months
R = Monthly interest rate
Manual computations are time-consuming and prone to mistakes. But with calculators, if you have a smartphone with the internet, you can enter the variables required in the formula and then click the submit button, and the tool will provide the result quickly.
2. Provides Amortisation Schedule
Your loan EMI consists of two components: principal and interest. But do you realise how much you are spending on interest versus principal repayment? You might not. The amortisation table can help you by presenting this information tabularly for each month until the loan is paid off.
During the first few years, you typically pay between 60% and 80% interest. And, as the loan nears its end, the interest payment becomes significantly cheaper.
Amortisation can help determine whether it is time to foreclose on a debt.
Suppose you have a Rs 50,00,000 home loan at a 9% interest rate and a 20-year repayment period.
Here is the amortisation table to provide you insight into calculator benefits.
| Year | Principal | Interest Amount | Ending Balance |
| 1 | Rs 93,635.52 | Rs 4,46,200.06 | Rs 49,06,364.48 |
| 2 | Rs 1,02,419.17 | Rs 4,37,416.40 | Rs 48,03,945.31 |
| 3 | Rs 1,12,026.80 | Rs 4,27,808.78 | Rs 46,91,918.51 |
| 4 | Rs 1,22,535.68 | Rs 4,17,299.89 | Rs 45,69,382.83 |
| 5 | Rs 1,34,030.38 | Rs 4,05,805.20 | Rs 44,35,352.45 |
| 6 | Rs 1,46,603.35 | Rs 3,93,232.22 | Rs 42,88,749.10 |
| 7 | Rs 1,60,355.76 | Rs 3,79,479.82 | Rs 41,28,393.34 |
| 8 | Rs 1,75,398.23 | Rs 3,64,437.34 | Rs 39,52,995.11 |
| 9 | Rs, 1,91,851.80 | Rs 3,47,983.78 | Rs 37,61,143.31 |
| 10 | Rs 2,09,848.82 | Rs 3,29,986.75 | Rs 35,51,294.49 |
| 11 | Rs 2,29,534.09 | Rs 3,10,301.49 | Rs 33,21,760.41 |
| 12 | Rs 2,51,065.97 | Rs 2,88,769.61 | Rs 30,70,694.44 |
| 13 | Rs 2,74,617.69 | Rs 2,65,217.89 | Rs 27,96,076.76 |
| 14 | Rs 3,00,378.72 | Rs 2,39,456.86 | Rs 24,95,698.04 |
| 15 | Rs 3,28,556.31 | Rs 2,11,279.26 | Rs 21,67,141.73 |
| 16 | Rs 3,59,377.16 | Rs 1,80,458.41 | Rs 18,07,764.56 |
| 17 | Rs 3,93,089.22 | Rs 1,46,746.35 | Rs 14,14,675.35 |
| 18 | Rs 4,29,963.70 | Rs 1,09,871.87 | Rs 9,84,711.65 |
| 19 | Rs 4,70,297.26 | Rs 69,538.31 | Rs 5,14,414.39 |
| 20 | Rs 5,14,414.39 | Rs 25,421.19 | Rs 0.00 |
3. Comparing Loan Offers
Each lender in the market is different. Some may provide more funding but charge higher interest rates, whereas others provide funds with greater repayment flexibility.
The calculator allows you to compare different lenders by entering their interest rate range, maximum and minimum funding availability, and repayment duration range. Choose the one with an affordable EMI.
It is crucial to note that loan against property come with various additional fees. You must pay processing fees, documentation fees, mandate fees, property inspection expenses, and a few others. You should compare these expenses before making a selection.
- Choosing Optimal Repayment Tenure
Never choose a lengthy payback period without considering its implications. While a longer tenure is noted for shorter EMIs, it also increases the total interest payable.
Here is an example.
Suppose you need a Rs 17 lakh home loan. The lender approves your loan at an 8% interest rate. Here is how a calculator can help you get an idea of the optimal repayment period.
| Parameters | Repayment Period | ||||
| 1st Year | 2nd Year | 3rd Year | 4th Year | 5th Year | |
| Loan Amount | Rs 17,00,000 | Rs 17,00,000 | Rs 17,00,000 | Rs 17,00,000 | Rs 17,00,000 |
| EMi | Rs 1,47,880 | Rs 76,886 | Rs 53,272 | Rs 41,502 | Rs 34,470 |
| Interest Payable | Rs 74,564 | Rs 1,45,273 | Rs 2,17,786 | Rs 2,92,094 | Rs 3,68,192 |
| Total Payable | Rs 17,74,564 | Rs 18,45,273 | Rs 19,17,786 | Rs 19,29,094 | Rs 20,68,192 |
Conclusion
Utilising a Home Loan EMI Calculator offers several benefits. Firstly, it simplifies EMI calculations, saving time and reducing errors. Secondly, it provides an amortisation schedule, aiding in understanding payment allocations over time. Thirdly, it facilitates the comparison of loan offers from different lenders, ensuring affordability. Lastly, it helps choose the optimal repayment tenure, considering both shorter EMIs and total interest payable. Overall, it’s a valuable tool for informed decision-making in home loan financing.
