- A home loan calculator gives an estimate regarding the affordability of the home loan
- Several EMIs are set up as per the cash flow for a given home loan
- The basic inputs to calculate EMIs for a home loan are principal amount, interest rate and tenor of the loan
- Generally, 35% to 45% of the income can be used to repay the loan and the remaining to maintain a balanced lifestyle. This percentage, however, varies for different families as per the need
- A home loan calculator can be found on the official website of all banks and Financial Institutions
What is a home loan calculator?EMIs or repayment is the first thought that comes to mind while planning for a home loan. The amount is generally huge, and if not planned properly, repayment can become a matter of concern. The banks and FIs have come up with a highly efficient tool that helps customers plan their loan repayment most effectively with a home loan calculator.
A home loan calculator is a tool that helps in the calculation of EMIs for a corresponding home loan that needs to be paid over a specified tenor. The home loan calculator helps customers to make an informed decision regarding the financials and how much can be deployed in the repayment of the loan. A home loan calculator also furnishes the total number of EMIs that will be required to repay the loan and how much will it cost you in totality.
A home loan calculator is also an excellent tool for financial planning that allows you to manage steady cash flow in the system after taking into consideration all the major expenses like a loan EMI.
Home loan EMIA home loan EMI stands for Equated Monthly Instalments that are paid towards the borrowed home loan. EMIs allow monthly repayment of the loan amount as per the specified rate of interest for a given tenor.
How does an EMI Calculator work?An EMI calculator works on a mathematical formula for the calculation of monthly instalments.
The formula is:
EMI = P x I x (1+I) ^T]/[(1+I) ^T-1]
P is the principal loan amount
I is the monthly interest rate
T is the number of total monthly instalments
Note: A monthly interest rate is calculated by dividing the annual rate of interest by 12 multiplied by 100.
The calculation becomes easier with a home loan EMI calculator. You just need to key in the desired inputs that are:
- Principal amount
- Tenor of loan
- Rate of interest
- Total number of EMIs
- Amount of each monthly EMI
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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