Availing of a home loan to buy your dream home is easy today whether you are a salaried or a self-employed person. But worrying about home loan interest rates and their calculation can be stressful. The home loan interest rates influence the overall affordability of the loan. An advance home loan interest calculator can help you compare the home interest rates offered by different lenders and select the lender offering you the best home loan interest rates. Higher interest rates have a direct impact on the EMI you would pay. So, let us look at how a home loan interest calculator can prove helpful to a common borrower.
Housing Loan Interest Calculator
The home loan interest calculator tells you the interest you must pay on a specific loan amount. It helps you assess the cost of availing of a such loan before applying for it. It also lets users compare various current home loan interest rates being offered by the lenders and figure out the offer that would prove to be most lucrative for a borrower. The home loan eligibility criteria also impacts the home loan interest rates. Fulfilling all eligibility criteria for a home loan increases your home loan amount eligibility and leads to quick sanctioning of loans. One can check loan eligibility online before applying for the loan to avail of low housing loan interest rates.
Home Loan Interest Calculation Formula
Home loan interest calculation can be done using a simple formula. The housing loan EMI calculator on a lender’s website will help you to calculate the approximate home loan interest amount and the total EMI figure to help you plan your budget accordingly. Enter the given details to know your interest and monthly EMI:
- The principal loan amount you wish to avail (rupees)
- Loan term (months or years)
- Rate of interest (percentage)
The formula for calculating the home loan interest would be:
e = [p x r x (1+r) n] / [(1+r) n-1]
Here, ‘e’ stands for the EMI amount, p presents the principal loan amount, r is the interest rate charged by the lender, and n represents the loan term or tenor.
A Home loan interest rate is the percentage of the principal charged by the lender to the borrower for using the loan amount. The interest rate charged by the lending institutions helps to determine the cost of your home loan. So, when you are paying your home loan EMI, the interest rate charged determines how much you must pay your lender against your loan every month. Interest rates are usually linked to repo rates and can vary from lender to lender.
Home Loan Interest Calculator Benefits
Borrowers who are thinking of availing a home loan to buy their dream home must know their net loan interest outgo per month before they opt for it. The benefits of using a home loan interest calculator are discussed below.
Using a home loan interest calculator or EMI calculator, one can calculate the interest to be paid on a certain loan amount for a given period at a given interest rate. Since manual calculations can be lengthy and prone to error, using this one can get error-free and quick results. Knowing the accurate interest amount for a given loan amount can also help borrowers choose the best lender.
Choosing the Right Tenor
Once you have calculated the home loan interest amount, you can now try permutations and combinations to calculate the right loan tenor for you. You can opt for a shorter loan period to quickly pay off your loan while paying lower interest rates but higher EMIs. Or else you can stretch the loan tenor to what you are comfortable with and pay a lower EMI but higher interest as the risk is higher here. This will decrease your financial burden to a certain extent.
Helps in Fund Management
A home loan Interest calculator can help to calculate the interest on the loan and how it will affect the overall finances of a person. Knowing in advance the interest portion to be paid in the EMI amount can be helpful for the borrower. It would help a borrower to know whether a balance transfer of a home loan would help him save on the interest part of the loan or not and whether he should opt for it.
Helps You Choose the Best Lender
Using the simple home loan interest calculator tool, you can compare the different interest rates being offered by lenders. The home loan interest calculator thus helps you calculate and know the total cost of each loan and the interest to be paid for the varied loan offers. Calculating the interest rate and the overall loan EMI helps the borrower select the lender who offers the best loan interest rates.
Thus, we can say that the home loan interest calculator has made life much easier for borrowers. No need for tedious, lengthy, and time-consuming mathematical calculations. Just enter the required details in the house loan EMI calculator and get the approximate interest amount in the blink of an eye.