Buying a home without a loan takes an individual’s massive amount of money. If you have a massive cash flow in your hand, you can get a home without a loan. Hence, very few people can buy their homes with their own money. For most of the population, a Home Loan is an answer.
A Home Loan is nothing but a secured loan provided by a lending institution of your choice, and it takes the said home as collateral. You pay a monthly amount of interest called EMI. To calculate this, people use a Housing Loan calculator. This calculator helps them to make a good judgment of their finances and, in turn, make an informed decision.
This guide discusses how you can plan your EMI and everyday expenses using a Housing Loan calculator. Check out this guide to learn everything about calculating EMI and making a foreseeable financial plan.
What Is a Housing Loan Calculator?
A Housing Loan calculator is a simple online system that allows you to calculate the amount of Housing Loan interest. This calculator is straightforward to use and provides us with exact results. Changing the variable that goes into calculating a Housing Loan and comparing different rates is very easy. Using a calculator gives excitement about the expenses that you are most likely to incur.
How Do You Calculate EMI?
To calculate Housing Loan interest, you need to understand how a Housing Loan interest is calculated.
EMI stands for Equated Monthly Instalments. These installments are nothing but a yearly division of the annual interest you need to pay for the loan repayment. Complex enough?
Let’s break the parts down:
The lending institution charges you an annual interest when you take a Home Loan. So, this annual interest is divided into 12 parts, and each part is the monthly installment you pay against your loan repayment.
The formula to calculate EMI is: P x R x (1+R) ^N / [(1+R)^N-1]
P= principal amount
R= rate of interest
N= number of years
For the interest rate, you need to divide the total rate by 12 into 12 monthly installments. If you don’t want to go through the complicated process of calculating the Housing Loan interest manually, you can use a Housing Loan calculator.
How to Plan Your EMI with a Housing Loan Calculator?
Using a calculator is very easy. Once you start using it, you must feed in all the required variables. You must find and compare different Home Loans against their interest rates and tenures. After selecting a final Home Loan with the lending institution of your choice, you can calculate the EMI amount.
When calculated with the help of a Housing Loan calculator, this EMI amount will give an exact amount. If your EMI comes down to INR 40,000, you will make fixed expenses of INR 40,000 each month until you have completely paid off the loan.
Planning with a housing calculator helps:
- Pre-calculate your expenses
- Choose a Home Loan based on your salary
- You can compare different loans and interest rates, giving you space to select an EMI that fits your monthly budget.
- Help you pre-plan your expenses.
Thus, planning with an EMI calculator is not only smooth and efficient but is highly handy regarding future planning.
Financial planning is a challenging matter. You need to take small steps each day. A Housing Loan calculator is a handy tool when it comes down to planning your finances. It will allow you room to choose your Home Loan and interest rates suitable to your ongoing financial lifestyle and expenses.
It will boost your savings and help reduce unnecessary expenses. Make sure to use the correct variables and a Housing Loan calculator before making your final choice.