Top Benefits and Uses of Home Loan EMI Calculator

 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.

1. 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.

2. 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.

3. Comparison: Since interest rates vary across lending institutions, using an EMI calculator can help users compare monthly repayments under different lenders easily.

4. 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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How to Claim tax Benefits on Home Construction Loan?

 Amidst the launch of different housing loan schemes like Pradhan Mantri Awas Yojana by the Government of India, the real estate sector has witnessed substantial growth over the years. One of the key advantages that borrowers get to enjoy with availing a home loan is the tax benefits it offers. Since EMIs are ideal repayment methods for this particular loan variant, which includes paying the principal amount and interest rates, home loan tax benefit inevitably applies to both of them.  

According to the Income Tax Act, 1961, borrowers get to enjoy exemptions in taxable income for both these components, which allows them to save substantially while investing in the purchase of a house. 

Therefore, it is necessary to be aware of aspects related to the same and evaluate the amount using a home loan tax benefit calculator. Following are some tax deductions applicable for individuals availing a home loan - 

• Section 24: Under this particular Section of the Income Tax Act, you can claim deductions on your home loan interest amount, up to a maximum amount of Rs.2 lakh. However, there are certain norms and home loan eligibility criteria borrowers are required to meet in order to avail of this benefit. 

• Section 80EE: For every first-time homebuyer, Section 80EE seems quite beneficial since it allows them to claim an extra subtraction of Rs.50,000 per FY towards interest payments. However, this benefit is applicable to individuals who have availed the loan between 1st April 2016 and 31st March 2017. Also, individuals applying for a joint home loan can enjoy additional savings as both the applicants are eligible to claim the home loan tax benefit. 

Apart from these, borrowers can also claim deductions of up to Rs.1.5 lakh on the principal amount under Section 80C. In some states, additional tax concessions are available on home loan for women. Therefore, if you are thinking about tax planning, it is advisable to go through all these benefits carefully before opting for a house construction loan. It is also advisable to utilise a home loan EMI calculator at the very onset to compute EMIs, alongside tax savings, to propagate better financial planning.

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