Securing a lump-sum credit to purchase your dream house might sound appealing. However, it might not be a convenient choice if not planned efficiently. These large sums are accompanied by substantial interest components and can result in hefty repayments. Defaulting on an instalment due to financial constraints in the course of a loan can negatively impact a borrower’s credit score. Using an EMI calculator before applying can help individuals plan their repayments more effectively.
Following are some significant ways in which an EMI calculator can benefit potential borrowers.
Accuracy and speed: EMI calculation involves a complicated procedure, and manual computation can result in discrepancies. Using a home loan EMI calculator provides accurate results within just a few seconds.
Effective financial management: An EMI calculator displays the total payable amount, EMI and the interest component separately. Individuals can adjust their inputs until these results match their home loan eligibility and affordability. Picking a suitable tenor and loan amount can aid in smooth repayment.
Comparison: Since interest rates vary across lending institutions, using an EMI calculator can help users compare monthly repayments under different lenders easily.
Free and easy: Home loan calculators are available on almost all financial institutions’ websites, free of cost. They are also easy to use. Individuals only need to enter 3 inputs to get the results.
Potential borrowers can enter the following details to view their payment breakup.
Required principal amount
Interest rate
Preferred tenor
Note that a longer tenor might result in smaller home loan EMI payments but will lead to increased interest cost in the long run. Conversely, if you can compromise your luxuries for higher EMIs, choose a shorter tenor and save remarkably on interest payments.
Also, be aware of home loan tax benefits under the tax regime you have opted for, new or old.
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