In August 2022, the RBI, or the central bank of India yet again revised the REPO rate to 5.4%, an increase by 50 basis points since July 2022. This will, in return, make them charge higher interest on all credit facilities. Minimum home loan interest rates will rise as a result of this and more people will opt for home loan transfers for better interest rates. If you are in between a home loan and need help with financial planning or are contemplating a home loan balance transfer, the home loan interest calculator can help you create a blueprint for the future.
What is a Home Loan Interest Calculator?
A home loan interest rate calculator is an online tool that calculates the amount of EMI a borrower will need to pay every month till the time the entire loan amount is fully paid back. This calculation depends on the rate of interest of the loan, the amount of the loan, and the period for which the loan has been taken.
The home loan interest calculator uses the given formula:
EMI = [P X R X (1+R) ^ n]
[(1+R) ^ n-1]
Using the above formula, the borrower can know:
EMI: It is the equal amount of monthly instalment that the loan applicant needs to pay every month till the entire loan amount is paid back.
The Breakup of EMI and Principal: This calculation gives the breakup of home loan interest and the principal remaining at the end of each month after paying the instalment for that particular month.
Schedule for Amortization: The amortization schedule shows the breakup of the loan payments and how the repayment is affecting the schedule. If a borrower can arrange for a surplus over and above the monthly EMI, then the calculation can show how the extra payment towards the principal amount will reduce his EMI.
Features & Advantages of a Good Home Loan Interest Rate Calculator
There are several home loan interest rate calculators in the market today and the Bajaj housing finance home loan calculator is one of the most trusted ones. So, if you are looking for a good housing loan calculator, use the Bajaj Housing Finance interest rate calculator.
Here are some features of a good home loan interest calculator:
Quick, Handy and Easy Usage –
The home loan interest calculator is handy, easy to use, and gives quick results. It makes lengthy calculations simple and provides error-free results within seconds.
Error Free Results –
The home loan interest calculators are online tools that can be used when manual calculations seem difficult and tedious. Just like normal calculators the home loan interest calculator provides accurate results based on the inputs given by the borrower within a few moments.
Comparative Analysis –
Different lending institutions have different schemes and varying home loan interest rates. A good home loan interest rate calculator helps to compare the loan schemes/options available in the market and choose the most suitable lender from amongst them. It helps the borrower in understanding housing loan eligibility calculation and choose the right lender for financing their dream home without disturbing their budget.
Calculate Best Loan Tenor –
A good home loan calculator helps to understand the best possible loan tenor. It helps to decide whether a short-term or long-term home loan would be financially more beneficial for you. The borrower can opt for a short-term loan if their budget allows them as EMIs will be higher here. Or they can also opt for long-term loans if they want to make their EMIs less burdensome.
Provides Other Charges Information –
The EMI calculator informs the user about the loan processing charges usually charged by lenders, the total interest, and the stamp duty fees. Knowing these costs are essential before taking a home loan from the bank as they may add up to a considerable sum.
Amortization Schedules –
By providing details of monthly payments, interest rate, and tenor of the loan, a good home loan calculator gives repayment options to the loan applicant to help them plan their monthly finances in advance. It helps to understand how pre-closure of the loan will affect their finances and help them close the loan.
Helps in Financial Planning –
This calculator also helps to determine the right down payment amount. After finalizing the down payment and loan amount that you need to borrow from the bank, you can make a financial plan to repay the loan. For example, if you have to repay a specific loan in two years, you can plan how much you can spend in a month. This strategy will help you cut down on unnecessary expenses or defaults in payment.
Customized Calculations –
Based on each individual applicant’s information (interest rate, tenor, and loan amount), the home loan interest rate calculator generates customized results suitable for each borrower.
Home Loan Transfer –
It can help you understand how much you can save on EMIs by way of a home loan balance transfer to another lender.
Summing Up
The benefits and features of using a home loan EMI calculator are great. Since calculating EMIs manually is time-consuming and exhausting, the calculators can conduct the task in a hassle-free manner. Thus, knowing beforehand how much needs to be paid as EMI helps the borrower plan his monthly finances proactively.
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