A home loan is a long-term financial responsibility. They are repaid in the form of Equated Monthly Instalments or EMIs. An EMI consists of two components, namely the principal and interest component of the loan. During the initial few years of the home loan repayment journey, the principal component of the home loan EMI is much lower than the interest component. 

In the journey of homeownership, loan repayment planning is important. In this article we dis cuss how you can use online tools, such as a home loan interest calculator, to plan your finances better. 

What is a Home Loan Interest Calculator?

Home loan interest calculators are online tools that can make loan repayment planning easy. These online tools allow home loan applicants to test various combinations of the loan value and tenor and arrive at an EMI that they would be able to comfortably repay. Home loan interest calculators, other than telling loan applicants the monthly EMIs they will need to pay, also tell loan borrowers the total interest they will pay their lender over the tenor of the loan. Thus, this online tool helps borrowers accurately assess the affordability of the home loan amount and loan tenor they have in mind as well as get a rough idea of the return on their investment. 

Home loan interest calculators, also known as home loan EMI calculators, ask borrowers to enter three details: the loan amount they wish to borrow, the number of years they will need to repay the loan, and the rate of interest they are being offered by their preferred lender. The calculator then delivers results instantly. The results include loan EMI, the total interest payout on the loan, and the total cost of borrowing funds. Alongside these, the final results delivered by the calculator also include an elaborate amortisation schedule, which is essentially all your loan EMIs broken down to show you how they will be diverted towards principal and interest component repayment each month. This tool is highly beneficial when you plan to avail a home loan, as it provides a clear picture of your financial commitments.

Benefits of a Home Loan Interest Calculator

The home loan interest calculator is a highly beneficial tool. It helps loan applicants in the following ways: 

1. The home loan interest calculator helps loan applicants understand the affordability of the loan. If the EMIs are too high or too low, the loan applicant can try different combinations of loan value and tenor until they arrive at a combination that delivers EMIs that fit perfectly into one’s budget and repayment capacity. Since the house loan calculator is also free to use, one need not worry about paying any additional fees or expenses related to the use of the calculator. 
2. By sharing with loan applicants the loan EMI that the borrower would need to pay each month to repay the loan on time, the home loan interest calculator gives the borrower a chance to do monthly budgeting and cut down on unnecessary expenses so that the home loan EMIs become easily affordable. This way, the home loan EMI calculator also saves borrowers from late fees and penalties. 

In conclusion, the home loan interest calculator or the home loan EMI calculator is a highly beneficial online tool which is freely available and free to use. Borrowers can therefore make sure to make this tool a part of their home loan journey.