Are you thinking of purchasing a house with the help of a home loan? But high property prices and therefore the unavailability of funds becomes a hindrance in buying a house. Access to finance within the kind of home loans has come as a boon for the common man. However, home loans, or any type of credit, comes with plenty of responsibilities attached to it. One must have a transparent idea of his/her finances before borrowing a hefty amount. Availing a home loan requires prior planning because it includes a relatively long tenure and can weigh on household finances for an extended time. An honest idea to calculate your EMI amount before signing on the line. A great tool like the Home Loan EMI Calculator can assist you out with this.
What is Home Loan EMI?
Before getting to understand the home loan EMI calculator, it’s important to know the basic information about what’s home loan EMI because if you don’t know the thing that you’re calculating then it’ll be a complete wastage of your time to find out about the calculator. EMI, the short form for Equated Monthly Instalments, is a fixed monthly amount that you simply pay per month so as to return the borrowed amount from the lender. Since a lot of individuals cannot pay the complete amount in one move to buy their dream home, they choose the simple EMI facility which may be a flexible repayment option.
Home Loan EMI Calculator
Now you’ve known about the Home Loan EMI, it’s time to introduce you with the much-talked-about home loan EMI Calculator. This calculator helps you in estimating your EMI amount with the help of a couple of basic details like all other calculators, it develops on the inputs that you just give to it. In the case of a home loan EMI calculator, it only needs three inputs – loan amount, rate of interest, and tenure. As soon as you feed all these details into it, you’ll get the specified output because of the EMI amount. The process of using it is so handy that it is often used by anyone.
Home Loan EMI Calculator Formula
EMI Amount can be ascertained with the following numerical equation:
EMI Amount = [P x R x (1+R) ^N]/[(1+R) ^N-1], where, P, R, and N is the variable, which implies the EMI value will change each time you change any of the 3 factors.
P, Stands for the ‘Principal Amount’. The principal sum is the first loan amount given to you by the bank, on which the premium will be determined.
R represents the rate of interest set by the bank.
N implies the number of years for which the loan has been taken. Since EMIs are paid each month, the duration is determined in the number of months.
Factors determining Home Loan EMI
Principal- The principal is the loan amount that you benefit from the loan specialist. It is straightforwardly proportional to your EMIs – lower principal will bring down your regularly scheduled payments and vice versa.
The rate of interest- The rate of interest is the rate at which the moneylender offers you the loan. It is additionally straightforwardly proportional to the estimation of your loan EMIs.
Tenure- The tenure is the time within which you repay your loan. The tenure is conversely relative to your home loan EMIs – longer tenure makes the regularly scheduled payments less expensive and vice versa.
Benefits of Home Loan EMI Calculator
- Simplicity and Speed: You don’t need different values filled with complexities to use the Home Loan EMI Calculator, actually there are only three simple details that you simply need. Simplicity is the best feature of it and you’ll get the results in a flash which makes the entire process of EMI calculation smooth and hassle-free.
- Finance Management: Once you have a transparent assessment of the EMI amount, you’ll be better prepared to create some changes in your monthly spending in order that you can put aside that EMI amount from your monthly income. The EMI calculator helps you in financially empowering you by providing you with the authentic results.
- Endless Flexibility: You’ll be able to use the calculator for as many times as you would like with different values till the time you got the right combination of right EMI and tenure aligning perfectly together with your monthly income. This endless flexible feature of the EMI calculator makes it a requirement to use before finalizing the loan amount. Remember that choosing a short tenure will fetch the higher EMIs and the other way around.
- Amortization Table: The calculator doesn’t only offer you the EMI amount but also the amortization table by which you’ll have an estimate about the principal and interest amount at different points of your loan tenure. With the help of this, you’ll also cross visit the bank if you want to know an estimation about the payments that you simply need to make.
Tax Benefits of Home Loan EMI
Taking a loan to buy a house are often expensive, but it also has certain benefits, especially when it involves taxes. the govt offers tax reliefs via the income tax Act, 1961 on the EMIs you pay per annum. These are as follows:
- Section 80C: You’ll claim a tax write-off of up to ₹ 1.5 lakh per annum on the principal amounts paid towards your property loan.
- Section 24: Under this section, you’ll claim a deduction of up to ₹ 2 lakh on the interest component you pay annually.
- Section 80EE: Under this section, you’ll claim a further interest amount of up to ₹ 50,000 per annum. This is often over and above the amounts mentioned in Sections 80C and 24. This deduction is subject to certain terms and conditions.
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