While home loans can help you buy your dream house, they can significantly affect your finances. A home loan EMI can consume a large part of your monthly income. Therefore, before you apply for home loan, you must check your affordability to avail a comfortable loan amount. An EMI calculator can help you do so. With an EMI calculator, you can check your affordability and find out your loan EMI and total cost of borrowing.
What is a home loan EMI calculator?
A home loan EMI calculator is an online tool that helps you calculate your EMI before applying for a loan. This tool is useful to calculate your affordability so that you can comfortably pay the loan you avail. To use a home loan calculator, you need to input your tenure, interest rate, and loan amount in the space provided or use the sliders.
Things to do while using the EMI calculator
- Try different combinations
The EMI calculator helps you try different combinations to arrive at an EMI that you can comfortably repay. You can input different tenures to get an EMI that fits in your budget. You can also input interest rates from different banks if you wish to compare the loan before applying for one.
- Use additional income
You can alter the value of interest rates, tenure, and loan amount in the calculator to get the desired EMI. Even then, if you are unable to get your desired loan amount, you can club your incomes. You can add interest or rental income while calculating eligibility. Moreover, you can also avail a joint loan with your spouse to increase your eligibility and get an affordable EMI. Clubbing the income of both applicants can help you increase the loan amount and get lower housing loan interest rate.
Things to avoid while using a home loan EMI calculator
- Adopt a rational approach
Any discrepancies in your income can put pressure on your budget while you are repaying the home loan. Therefore, you must avoid overestimating your income while checking the EMI. Whether you are a self-employed businessman or a professional, there can be days when you do not have high profits. Similarly, there can be salary cuts that can affect your EMI payments. Therefore, it is better to take an average income value while using an EMI calculator. You must be realistic and rational while checking your affordability and consider other expenses while determining the EMI.
- Do not underestimate interest rates
Lenders offer different interest rates for different applicants based on their eligibility. You might not get the interest rate that the lender promises on their website. Therefore, it would be best to check your credit score and other eligibility criteria. If you have a low credit score, you might be offered high interest rates or low loan amounts. You must consider your eligibility while entering the lender’s interest rate in the EMI calculator.
An EMI calculator can help you find your affordability and get an EMI that you can comfortably repay. However, you must know how to use it efficiently. These tips will help you use an EMI calculator in the best possible manner.
