According to Business Today, a systematic rise in the market borrowings had a significant impact on the housing loan market. On average, the top players in the housing finance brought in loan disbursal of Rs. 25,000 Crore per month.
It had been preceded by the escalated market prices in the real estate industry. The same called for the need to depend upon external financing options to ease the purchase of houses sans stressing one’s budget.
While reputed lenders offer their housing finances to eligible borrowers at affordable rates of interest, they also pool in multiple add-on benefits. Thanks to the increased competition amongst the various NBFCs, borrowers have the advantage of gaining access to convenient financing tools like loan EMI calculator.
Benefits of using housing finance EMI calculator
Since mortgaged loans like housing finances involve a considerable amount, it is imperative to ensure that potential borrowers tally their requirements and the lenders’ offerings before settling upon an advance. It is where an online home loan EMI calculator comes to help. Here are a few benefits of calculating EMIs before taking home loans
- Helps decide the loan amount
Home loans require potential borrowers to mortgage collateral, and lenders offer an LTV of up to 75% against the net market worth of the property. It would require the property to –
- Lie within the serviceable range of the lender in question
- Be in good condition
Subsequently, lenders are assured of the loan amount lent as they can liquidate mortgaged property in case of a default. Thus, they are more than willing to provide up to Rs. 3.5 Crore against nominal home loan eligibility criteria and documentation. However, borrowing more than one’s repayment capability creates an unnecessary financial burden.
EMI calculators assist prospective borrowers in calculating the loan amount that they can avail without stressing their budget. Also, remember to take into account the current financial obligations that you have before availing a housing loan and keep your FOIR necessarily within 30-50%. Compute this using a calculator and then decide upon the loan amount.
- Aids in choosing a suitable repayment tenure
Reputed NBFCs like Bajaj Finserv offer their potential borrowers with an extensive range of repayment tenure from 2 to 20 years on their Home Loan. Individuals can thus choose upon a repayment tenure that best suits their repayment capability. However, borrowers must decide upon their repayment tenure after careful consideration since it has a crucial role to play in determining the EMI of a loan.
The amortization process to calculate monthly installments of a loan takes into account factors like housing loan interest rates, chosen repayment tenure and the involved loan amount. Thus in case, a prospective borrower chooses lower tenure, his/her EMI will be higher and vis-à-vis.
- Helps in knowing EMIs in advance
The primary purpose of a home loan EMI calculator is to compute EMI and help potential borrowers decide upon both loan amount and lender based on the interest rates charged. All that individuals need to do is provide details on –
- Loan amount
- Rate of interest
- Chosen loan repayment tenure
Following the calculation of their monthly installment and tallying it with their current repayment capability, individuals can settle upon a lender who offers an attractive rate of interest on their home loans. They should also check up on the home loan fees and charges provided by the lender in question. Choosing a suitable lender with the help of an EMI calculator also gives you access to considerable funding couple with add-on benefits of tax deduction. Thus, you can save up on the tax on principal and interest part of your loan amount under the Income Tax Act Section 24(b), 80C and 80EEA.