The home loan preparation process doesn’t start when you apply for a home loan, it starts from the very foundation – researching and forecasting a home loan and planning a temporary repayment schedule. Your home loan is a long-term financial commitment, and your EMI must be paid on time, without any delay or default. Hence, identifying potential EMIs is what you should pay close attention to.
Home loan EMI calculators are readily available online and help you calculate your EMIs values, based on the data you enter. They make it easy to plan your repayment schedule. This is also useful if you want to transfer your home loan balance to a new lender and want to know which EMI is more compatible with your financial requirements.
Smart Ways to Calculate Home Loan EMI
1. Complete the home loan amount you want
The first step in planning your repayment schedule is to determine how much financing you will need from the lender, based on your EMIs. An applicant with a solid financial profile who can meet the eligibility criteria as required will usually get a large loan.
Although your final loan amount is determined after several rounds of negotiations with your lender, it is a good idea to formulate your own plan before approaching it. If you are looking for a large loan then you can consider borrowing from Bajaj Housing Finance Limited, whose attractive housing loan benefits include a penalty of Rs 5 crore* or more based on eligibility, at competitive interest rates.
2. Select the appropriate loan term
After you’ve decided how much financing you’ll need from the lender, it’s time to fix the term of the loan, or the period during which you will repay the loan. There are many considerations to take into account, such as your age at the time of borrowing, your EMI to income ratio, and your financial profile.
Generally, lenders expect to complete the loan repayment by the time the borrower reaches 62 years of age or retirement age. The younger the applicant, the longer the repayment period. An applicant who is nearing retirement may consider getting another applicant to enhance their eligibility in order to have a longer repayment period.
Lenders also prefer that the borrower’s cumulative EMIs, for all loans, not exceed 50% of the net monthly income. If you already have a large debt obligation, this may affect the size of the EMI and the term of the loan.
3. Get the best interest rate
Finally, but most importantly – the interest rate you need to service your loan determines the length of the repayment period. Lenders such as Bajaj Housing Finance Limited are ready to offer nominal interest rates starting from 6.70%* to salaried applicants with strong repayment capacity. If you qualify for these reasonable lending rates, you can save significantly on the outflow of EMI, over the life of your loan.
Applicants must also decide what type of interest rate they prefer – fixed or variable, before finalizing their loan. By choosing a fixed interest rate, you remain unaffected by fluctuations in interest rates and enjoy constant interest all the time. The floating rate is usually linked to the company’s internal reference rate or the linked external reference rate (the RBI’s repurchase rate) and is sensitive to market conditions that can help take advantage of a lower interest rate cycle as well.
How to Calculate EMI Home Loans
Those who want to perform calculations on MS Excel can use the following formula to calculate the expected EMI:
PMT (RATE, NPER, PV, FV, TYPE)
RATE is the interest rate offered by the lender divided by 12
NPER is the number of EMIs
PV stands for Principal Amount
Remember to set the FV and TYPE values to 0 (zero).
Home Loan Eligibility Details
The last word
Now that you are convinced of the efficiency of the Home Loan EMI Calculator, here is the reason why you should use the Bajaj Housing Finance Home Loan EMI Calculator to help calculate your EMI.
- Saves the trouble of error-prone manual calculations
- Comparison of permits for housing loan rates
- Helps better financial planning
- He was able to consider other loans along with the new one and manage them better.