The affordability of your home loan primarily rests on your EMIs as this is the amount you need to pay consistently through the entire tenor of the loan. This is why before applying for a home loan, it is important that you carefully select a lender who gives you a sanction on nominal interest rates. Getting financing on reasonable housing loan interest rates will ensure that the interest obligation towards your loan is kept under check. This maximizes your affordability, allows you to pay a lower EMI, and help you manage your finances better.
Take a look at how calculating your home loan EMIs beforehand helps you.
It helps you decide how much to borrow
Calculating the EMIs for your home loan in advance using the housing loan EMI calculator allows you to arrive at an amount that fits your monthly budget. You can, for example, use the Home Loan EMI Calculator available on lender websites such as Bajaj Finserv. Here you can alter the tenor and housing loan interest rate parameters alongside the loan amount to arrive at the most affordable EMI. Vary the amounts until you are completely sure of the EMI you can pay. Based on this calculation, you can apply for a home loan in a more informed way.
It helps you plan out repayment
Once you know how much you can afford to borrow based on the interest rates, alter the tenor to arrive at an EMI you are comfortable with. This will help you plan your repayment better. Gauge your fixed expenses to see what your most important financial commitments are, and where you can cut back to ensure your EMIs are paid on time. This planning will help you stay stress-free through the tenor of the home loan, and eliminate additional costs such as EMI bounce charges and penal interest.
It helps you plan prepayments
Knowing your EMI in advance, before the start of your home loan, allows you to do your prepayment planning to reduce your interest payments and pay off your home loan sooner. For example, you can time your investments or save money every month to coincide with your home loan tenor and make part-prepayments with ease.
Now that you know how important calculating EMIs are for your home loan, take a look at the steps through which you can arrive at the most affordable EMI component for your loan using the home loan EMI calculator.
- Visit the calculator page and select the loan amount of your choice. For example, let us take Rs.50 lakh as your starting amount
- Then in the next bar, select the tenor of your choice. In this case, let’s go for a tenor of 360 months (40 years)
- Then in the next bar, select the interest rate. Here let's assume you receive your home loan at a nominal rate of 8.40% from the lender
- After entering all this, the 3 boxes at the bottom of the page will show your total interest payable, total payment, and your EMI respectively. In this case these would be Rs.24,07,076, Rs.74,07,076 and Rs.61,726 respectively
You can keep altering the amounts for each parameter unless you attain an EMI that is affordable for you. Apart from this, once you are ready to take the loan, do not forget to check your home loan eligibility to maximize the chances of approval.
Bajaj Finserv brings you pre-approved offers for personal loans, home loan, business loans and a host of other financial products. Not only does this simplify the process of availing financing, but also helps you save on time. All you have to do is share a few basic details and check out your pre-approved offer. Need instant financing? Think it. Done with Bajaj Finserv.
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