Why You Should Use a Home Loan Calculator before Applying For a Loan - Ganna Magazine Blog

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Why You Should Use a Home Loan Calculator before Applying For a Loan

It is always wise to get to know the details of a housing loan before availing it. This will help you to understand exactly how much amount from your monthly earnings will go in repaying the loan. Accordingly, you can plan and proceed with the application once you know the EMIs to be paid.
Our life is completely dependent upon loans today. Housing loans are one such type of loans, without which, it is indeed hard for all to build or buy a house of their own. This is because the money required is not a small amount and it is not possible for everyone to get hold of a house purely on own funds. So, you have banks and other financial institutions to help you out in your endeavours to build your dream home. However, there are certain factors, which you ought to keep in mind before approaching for a housing loan. 
Everything you need to know about a home loan calculator:
It is essential to plan before applying for a housing loan. This will help you to manage your funds effectively, and you will not fall in any false situation in the future. A home loan calculator is a tool that gives a preliminary idea about the equated monthly instalments, more commonly known as the EMIs, which you have to bear for the housing loan. Several factors determine these EMIs, some of which are mentioned below:
    Loan Amount: The total amount that you avail as housing loan is known as the loan amount, not necessarily, the whole sanctioned amount. Sometimes, it may so happen that you do not avail the whole of the housing loan amount. In such cases, the EMIs will be calculated based on only the portion of loan amount availed. So, you never have to pay an excess amount for the un-availed portion.
    Interest Rate: This is again a very crucial factor while deciding upon the EMIs. Interest rates are of fixed and floating types, based on which, the amount of monthly instalments varies. Moreover, the interest rates are competitive nowadays and always calculated on the decremented amount. It is a common misbelief among the masses that their EMIs are eaten up for only serving the interest whereas the principal hardly goes down. This is not true at all as the EMIs always bifurcate to service the interest as well as to reduce the principal. Halfway through the loan term, you will observe a decrease in the loan amount.
    Repayment period: This is the total tenure of the housing loan. The EMIs vary according to the loan term, and it is also an indicator of the number of instalments due.
    Amortisation Schedule: This is a special chart showing the break-up of the EMIs throughout the loan term till the loan amount in absolutely zero. You can get this schedule if you request for the same from the financial institutions. This helps a lot in over viewing the whole process of repayment of housing loan.
Home loan calculator is a one-stop tool that gives you a fair idea about the EMIs based on the varying loan tenure and interest rates, relieving you from the cumbersome job of manual calculation. It will also enable you to select the appropriate loan tenure and corresponding EMI based on your eligibility. This, in turn, will help to maintain a healthy track-record and also a good credit score.
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