When you avail of a home loan, the EMI is a crucial factor to consider. And, you can calculate the EMI by using a home loan EMI calculator. Read on to know more about this useful tool and its benefits.
When you talk about a home loan or any other loan, the word ‘EMI’ would invariably find its mention in the conversation. The EMI or Equated Monthly Instalment is the amount you pay to the financial organisation every month until you repay the full loan amount or till the end of the loan tenure. The amount includes both the principal amount and the interest component. Typically, the EMI amount is fixed at the time availing the loan.
The lenders determine the EMI based on the loan amount, the duration, income profile, etc. And the EMI has a direct impact on affordability. Hence, it is paramount to know the EMI beforehand to plan your finances well and repay the amount without any hassles. This where the loan EMI calculator plays an important role.
What is a home loan EMI calculator?
An EMI calculator is an online tool that allows you to calculate the exact home loan EMI amount you must repay to the lender. Today, as the lenders offer online services, they have an EMI calculator on their website. It is a simple and easy-to-use tool wherein you must enter necessary details like the loan amount you want to borrow, the interest rate levied by the lender, and the duration for which you wish to borrow.
After you enter the details, the tool will automatically do the calculations and show the exact EMI payable. It also shows the break-up of the EMI amount, including the interest component and the principal amount.
What is the formula for calculating EMI?
Most home loan EMI calculator uses the following formula:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
In the above formula,
- P stands for the principal amount or the amount sanctioned to you by the lender
- R stands for the interest rate levied by the lender
- N stands for the loan duration
You must know that the principal amount, interest rate, and duration are variables. This means, when you change the value of these components, the EMI amount will vary.
Benefits of using Home Loan EMI Calculator
As a prudent financial planner, you would know that buying a home is a significant investment, and you would surely want to do it right and get the best value for the investment. Hence, it is advisable to use the home loan EMI calculator and compute the EMI amount beforehand to plan your finances well to make provisions for the EMI and not let the repayment be a financial burden.
- Provides immediate and accurate results
While you calculate the EMI manually with pen and paper or using an excel sheet, it can be frustrating. Not to mention, there is an element of human error, which may lead to inaccurate results and put off your financial planning.
You can get rid of these hassles and use the online home loan EMI calculator. Just enter the details as required, and the tool will give you accurate results with just a click of a button.
- Easy to use
Another significant benefit of using the EMI calculator is that it is easy to use. You need not have any prior experience or technical knowledge. The tool is self-explanatory; you must enter the details or adjust the sliders, and the calculator will do the calculations.
- Free tool
You can use the home loan EMI calculator at any time of the day you want and from anywhere as per convenience. It is available 24×7, and you can use the calculator any number of times without incurring any cost.
