How to calculate home loan EMI? Now this is a question that everyone has a doubt about unless it is cleared. A home is an aspiration and definitely carries a piece of the heart. However, to purchase this amazing piece of emotion, you need a huge amount of money. A home is the biggest investment that can be made in an entire lifetime. It not only increases the financial and social status, but also increases the responsibility. A home loan is a long-term commitment, so taking each step carefully will be the right way to handle your borrowing. Repayment is easy in the EMI scheme. The entire amount is divided into simple installments and paid. This does not put any sort of burden on the home owner. However, a wrong decision regarding choosing the EMI can make the home loan a bad debt. Eradicate all the chances of turning your home loan into a bad debt with the online home loan calculator. It will help you compare and calculate the right EMI amount according to your eligibility. Take a look at all the aspects of a home loan EMI calculator.
Some key takeaway about a home loan EMI
When you borrow a home loan from any financial institution or a bank, it is repaid in the form of an EMI. The EMI is an equated monthly installment that is paid along with the rate of interest every month. A home loan EMI includes the rate of interest and principal loan amount as divided according to the tenure of the loan. Choosing the right EMI will be dependent upon the tenure of the loan, principal loan amount and rate of interest. Keeping the EMI under control will always ease the loan repayment. A home loan EMI will be high because the loan amount will be high. The borrower should choose the EMI as per their ability to repay. There should not be any burden of loan repayment.
Components of a home loan EMI
The EMI that an individual pays towards a home loan has three main components. They are, namely, the tenure of the loan, principal loan amount and rate of interest. Take a look at how these components should be chosen so that you can get a suitable home loan EMI.
Principal amount: the principal loan amount is the amount of debt that a home owner borrows from a financial institution. It needs to be the amount that one is capable of paying. Upon this principal loan amount, the EMI will be decided. It is very important to get an EMI right, so choose the amount that is feasible for you to repay. There is no need for any burden and a home purchase can wait.
Tenure: The tenure decides whether the EMI will be high or low. When you take a long-term loan, the EMI will be low. Similarly, when you take a short-term loan, the EMI will be high. Take a short-term loan only when you have a very high income.
Rate of interest: The rate of interest is the amount that a borrower pays to the loan provider for offering the loan. Every amount that is borrowed comes with a fixed rate of interest. This rate is not a fixed amount. There are various factors. Meet your eligibility criteria and look for the right rate of interest if you need a low EMI. An EMI is also influenced by the rate of interest.
Formula to calculate the EMI
Principal loan amount+rate of interest/tenure (number of months)
Here, the principal loan will be added to the total rate of interest and then divided by the number of months that you choose as your loan tenure. This will give you an EMI amount. This amount can be easily calculated with the help of an EMI calculator. The amount that comes, you need to pay that amount for the entire tenure to successfully close the loan. It will be a good borrowing experience when you choose the right EMI and it does not become a burden on you every month. Payment can not be missed, so make sure you choose the right EMI.
How to keep the EMI low?
To keep EMI low, you need a small amount of principal, a low rate of interest, and yes, the tenure should be a long-term one. It is helpful in this regard, that choosing the right factors will give you the best borrowing experience. To keep the EMI low, you need to keep your eligibility high, meet all the criteria, choose the right loan provider and definitely take the right decision regarding the components of the EMI. If you choose according to your ability, you will not have a bad debt experience.
Wrapping up
In a nutshell, the answer to the doubt as to how to calculate home loan EMI is clear above. When you opt for an online home loan, you must consider the right amount, rate of interest and definitely the tenure. Borrow responsibly so that you don’t end up with a bad debt.
