How does the home loan calculator work?
Planning for a home is one of the most important endeavours of life. Whether it is planning for a housing loan, or planning to directly buy the property, a good planning is crucial to enhance the investment opportunity. With the rise of aspirations for buying one’s own home, and with the value of property increasing day by day, owning a home is a viable solution from both buyer and an investor point of view. Precisely why home loans have become one of the most sought after loans at present age.
Home loan is usually taken for a longer period of time, upon which a certain percentage of interest is levied. And here the home loan eligibility calculator plays an integral role. Hence a well planned EMI calculator is an important tool which will assist in solving all doubts and queries.
How does an EMI Calculator work?
An EMI Calculator is a handy tool that calculates the monthly amount payable to the bank every month. Calculating an EMI is essential for having a well-planned layout of housing loan. The mathematical formula for calculating EMIs is:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
The attributes involved are:
- Principal Loan Amount (P): This is the original amount lent by the bank. The loan amount will depend on one’s need and the purpose of the loan. Higher the loan amount, higher will be the EMI that you will pay for the loan taken.
- Tenure (N): The tenure of a loan refers to the total time period given for the repayment of the loan.
- Rate of Interest (R):This is the rate at which the interest is charged on the principal loan amount. The interest rate varies according to the type of loan taken and the bank from which one is taking the loan. The rate of interest has a direct bearing on the EMI amount. This is why it is essential to compare interest rates across banks before opting for a housing loan.
Benefits of Home Loan EMI Calculator?
The home loan EMI calculator is a hassle-free simple generic calculator, where you get the answers for EMI by using the attributes and entering the values into the formula. You get the clear outcome of the amount a loan will be granted and for how many years along with the payable interest. With the home loan calculator, you can plan your budget beforehand for availing a home loan.