Buying a home for yourself is a significant achievement considering the current scenario. It is not only a shelter but a lifetime investment. Many banks and financial institutions offer home loans to help you achieve this aspiration. They let you borrow a considerable sum to finance your property and charge an interest rate for it.
As it is a hefty amount to repay in one go, yousettle it in equated monthly instalments. Now, getting an estimation of the same allows you to plan your application wisely. You can use the home loan EMI calculator to do this. It is a free tool available online for your perusal. You should also consider the factors affecting the EMI for its effective usage.
Here
are some of them:
Interest rate: The fluctuations in home loan interest rates significantly affect the EMI. It is the case when you opt for a floating rate. Its impact may result in positive or negative implications depending on the market scenario and the base rate decided by the Reserve Bank of India. You should choose this type of interest rate when you have flexible income to enjoy the benefits when there are dips in the rate.
Loan duration: The longer your loan duration is, the lower your EMI gets and vice versa. This means even the slightest change in the period can affect the EMI. So, you must think about this while finalising your loan tenure. Using a home loan calculator gives you an accurate idea of this. It is important to note that a longer-term may seem attractive with the lower instalments, but it ends up increasing your interest rate.
Prepayment: It is always a good idea to use your surplus funds towards lowering your debt burden. When you do this, your outstanding principal amount reduces, which in turn lowers the EMI payable. If you want to check this difference, you can do so with the EMI calculator for home loan at any given time. However, lenders charge up to 1-5% penalty charges on such prepayment.
Shifting lender: Even after taking the loan, keeping tabs on other lenders and their offers lets you know if you are compromising your interest rates. Checking this from time to time with thehousing loan EMI calculator is a good idea. When you find a better offer, make sure to weigh in the benefits against the transferring cost. If satisfied, you can quickly shift to the lender by finishing the paperwork and balance transfer. This, in turn, affects the EMI you get.
Step-down or step-up method: Both are repayment techniques where step-up means the EMI increases with the loan tenure, and step down refers to the opposite. Younger borrowers opt for the former, while the latter is suitable for retiring professionals.