A home loan comes as an effective solution where individuals get to obtain a substantial amount to finance property purchases without dipping into their savings. While reduced housing loan interest rates have made it easier for borrowers to invest in real estate and tackle EMI liabilities easily, others have struggled due to inadequate cash flow. 

• As per the data excerpted from NACH, nearly 32% of auto-debit transactions failed in September 2020. 

Since the tech-savvy generation is well acquainted with online tools like home loan calculator, handling such issues has become comparatively easier. Estimating monthly instalments before applying for the advance and planning other expenses accordingly is the ideal way to deal with such issues.

Benefits of using a housing loan calculator 

Considering the high property prices in India, purchasing a house without external funding inevitably can get challenging. While credit facilities like home loan allow you to obtain a sizeable quantum to invest in housing properties, they also impose additional financial liabilities. 

It is, therefore, imperative to plan your finances to make this borrowing process easier, and a housing loan calculator can be extremely helpful in this regard. 

Here are the aspects it can help with –

Opting for the right tenor and loan amount

The equated monthly instalments tend to get higher when you borrow a large sum. Using a home loan calculator is necessary to assess how much amount you should obtain, which repayment schedule to choose, depending on your financial capacity. Even though a longer tenor temporarily reduces your EMI burden and comes with extended home loan tax benefits, the overall borrowing cost and interest payable also increase at the same time. 

For instance, if a 12-year loan comes with a 6.9% interest rate, financial institutions can charge more than 7% if you extend the tenor to 22 years for the same loan amount. With a shorter tenor, you can expect reduced interest rates and a quick way to alleviate your financial burden. 

• Easy and accurate calculation 

Calculating EMIs can get extremely tedious, especially if you are comparing different interest rates and repayment tenor before avail a home loan. 

The calculation might also be inaccurate if done manually. A home loan calculator is generally available online, where you can simply provide the principal amount, tenor and rate of interest to derive the EMI. 

• Compare loan offers 

Housing finance companies provide several seasonal offers on home loans these days, and with such offers, you can expect a little concession in interest rates. Even though due to its secured nature, home loan interest rates are normally affordable, it is always wise to compare different lenders before making a choice. 

Using an EMI calculator, you can quickly determine which lender is offering the best deal or concession and choose one that suits your financial health. While calculating EMIs beforehand is necessary for those planning to opt for a home loan, existing borrowers can also utilise this calculator and compute EMIs before opting for a loan balance transfer.

An EMI calculator also helps borrowers determine if they are paying more than what’s necessary. On finding that they are servicing higher EMIs, borrowers can make use of the following tactics to reduce the same.

Tactics to reduce home loan EMI

Apart from adjusting EMI components, adopting the following strategies can reduce your monthly liabilities –

• Opt for a home loan balance transfer: If you are willing to extend your home loan tenor, refinancing is the best way to reduce repayment liability. Make sure to check which financial institutions are offering lower interest rates so that you can quickly make a call. 

In this regard, look for pre-approved offers that can make availing of the loan faster and hassle-free. These offers are available on various financial products, including home loans, loans against property, etc. Check your pre-approved offer by entering your name and contact number.

• Make part payments: Consider paying a significant portion of your loan before the tenor ends; it inevitably brings down the overall outstanding amount as well as your monthly instalments. 

These days most financial institutions have kept different financial tools, including home loan calculators available, to help the borrower choose the right repayment schedule. Since EMI components play a huge role in the overall cost of borrowing, make sure to choose them wisely to handle other responsibilities conveniently.