Today, most of the people have to apply for home loans in order to afford house purchases. Even though these loans cover most of the finances required to purchase a house, it is still quite a challenge to make such a decision. This is because you not only have to worry about the home loan EMI, but also the loan’s interest rate. It is also important to find a suitable repayment tenure for the loan so that there are no financial complications in the future.
So, before you apply for home loan to invest in a property, it is necessary to check the affordability of getting such a loan. Many have struggled with paying off their home loans and defaulting on their EMIs negatively impact their credit scores. An effective way of avoiding this from happening is to make use of a home loan EMI calculator to check which repayment plan is convenient.
While using this calculator, make sure to input these three areas accurately:
- Home loan tenure
A home loan tenure refers to the period in which you choose to repay the home loan. This tenure plays a very important role when it comes to calculating monthly instalments of the loan. A lender will offer different tenures to choose from. You can either opt for the short-term or long-term repayment tenure. Now, a short-term tenure means that the EMIs would include bigger amounts and a long-term tenure will have smaller amounts. Going for the former will mean that you save less of your income, however, the total cost of the loan will be cheaper compared to the long-term tenure since the total number of EMIs are cut down, thus saving on the interest. Check out various tenures using the home loan EMI calculator and find the EMIs that suit your repayment capacity.
- Home loan amount
This is the total amount that is borrowed from the lender to buy a house. Before approving a certain loan amount, the lender will check the applicant’s age, income, credit score, bank statements, and so on. After reviewing all these factors, the lender will offer a certain loan amount. Do note that in order to be eligible for a big loan amount, it is necessary to have a high income. In addition, the interest that is charged on the loan will depend on the amount borrowed. Since the EMIs of the loan will depend on the loan amount, the EMI calculator will require this input.
- Home loan interest rate
The interest rate of a housing loan will differ from one lender to another. The interest rate is considered to be one of the most important factors while choosing a loan plan. This is because getting a low home loan interest rate can make a significant difference to the EMI payments. Make sure to provide the exact interest rate of the home loan using the EMI calculator. This will help you understand whether the home loan is affordable, or whether you need to start looking for a different loan plan with a better interest rate.
Of course, calculating the repayment of a loan is possible too. However, manual errors are natural and with such a big loan, it is best to make use of a home loan EMI calculator and be sure of the repayment plan.