In the modern world, owning a home is both a dream and a need. However, purchasing a home is very expensive, which requires you to take hefty home loans. Therefore, one of the largest monthly expenditures for many people may be the EMI on their house loan. An individual’s take-home pay typically consists of 35–40% EMIs. Little is left over to invest to achieve other financial responsibilities due to the hefty EMIs.
Because house loans often have a long term and can significantly impact a family’s finances, applying for one involves planning. This would include looking for ways to reduce your home loan EMI and calculating the monthly amount you will have to pay using a home loan calculator.
Read through this article to know more about how you could reduce your home loan EMI and use a home loan calculator in the process of doing so.
What is a home loan calculator?
You can easily find a home loan calculator online. It is an automated online tool to calculate and track how much monthly EMI one needs to pay on their loan. The system also comes with a feature which shows the details of your house loan, such as payment schedules and the total payment value.
What are the benefits of using a home loan calculator?
The amount of loan and interest includes long digit numbers; thus, manually calculating these values could lead to inaccuracies. Therefore, using an automated tool comes with great advantages.
- With the use of a home loan calculator, you can easily calculate the amount of EMI that needs to be paid every month without any delay.
- Home loan interest rates vary depending on the lenders from which you get the loan. Using an online calculator, you can easily compare the loan lenders’ different house loan interest rates.
- Instead of calculating the different values manually, you can use an online calculator which does the same work in less time and with greater ease. For instance, you will have to input only three values: Principal loan amount, home loan interest rate and tenure.
Tips to reduce your Home Loan EMI
Taking a loan could seem a great burden, as you must worry about paying large monthly EMI. This problem is much more challenging for people who have taken out house loans with excessively high EMIs. What if you could find ways to reduce this burden? Following are some tips through which you can reduce your monthly EMI.
- Change the lender to one with lesser interest rates
If your current lender is taking a great number of interest rates on your loan, then it would be better for you to switch to another. house loan interest rates vary among every loan lender; thus, choosing the one which provides home loans with a lesser interest in comparison to others can reduce your EMI burden by a great amount.
- Switch from fixed to floating rate
You are more likely to be paying a greater house loan EMI than necessary if you choose a housing loan with a fixed interest rate. However, you can gain as the interest rate declines by selecting a floating-rate loan.
- Pay a large down payment
Paying a greater loan beforehand saves you a lot of your money. For example, you could save the amount of interest that you would otherwise spend on the EMI every month. You can also ensure that the principal amount is repaid as soon as possible. This would reduce the interest you would have to pay in the long run.
- Extend your tenure
You can choose to extend your tenure if your financial situation does not allow you to make regular payments of high EMIs. This can enable you to spread out your payments over more time and relieve you from paying large sums every month.
To conclude, if you plan to apply for a house loan, a home loan calculator can help you plan it very well. If not planned, the entire process of paying large sums of EMI’s and home loan interest rates could be a great burden. Therefore, make an informed choice between different home loan interest rate plans and lenders, using a house loan calculator.