# Home Loan Calculator -Is It worth Using to Pay off Your Loans?

Thanks to the digital world! You can explore-what suits your pocket with ease. Well, guess what loan applicants are thinking of Home Loan Calculators you are on the right track. In all housing finance companies and banking sites, you may find Home Loan Calculators, also called as the EMI Calculators. You can quickly calculate your eligibility, check the proposed home loan amount, interest rate, tenure, EMI Per month as per your convenience.

Home Loan EMI-

EMI, short form for Equated Monthly Installment that is paid every month to the bank or any other financial institution till the time loan amount is paid-off completely. It involves the interest on loan along with the portion of the principal amount to be repaid. The sum of the principal amount and interest is divided by the tenure i.e. number of months, in which the home loan has to be repaid. This amount is repaid every month. The interest portion of the EMI would be larger in the initial months and slowly reduce when compared to the principal amount. The exact percentage apportioned towards payment of the principal is dependent upon the interest rate. Even though there will be no change in your monthly EMI payment but the portion of the principal and interest components gets changed with time. With every successive payment, more will be the payment towards the principal and less in interest.

Home Loan EMI Calculator Formula

The formula specified below is used by EMI Calculator for calculating your EMIs applicable on a home loan :

EMI = [P x R x (1+R)^N]/[(1+R)^N-1]

where,

EMI= Equated Monthly Installment

P= Principal Loan Amount

R= Monthly Interest Rate

N= Number of Monthly Installments

For example : In order to calculate EMI for a principal value of ₹ 1 lakh, 10% interest rate and 12 months tenure; following will be the calculations:

Principal amount : ₹  1,00,000

Rate of Interest : 10%

Tenure : 12 months

Calculated EMI : ₹ 8792

After going through above example, it is noted that there are three governing factors behind EMI payments : principal amount, interest rate and tenure. The EMI payments are directly proportionate to the loan amount and interest rates, and are inversely proportional to the tenure of the loan. The higher the loan value or interest rate, the higher is the EMI payments and vice versa. In the context of tenure of the loan, the total interest amount to be paid increases with the increase in tenure, the EMI payments decrease with an increasing tenure.

Benefits of using Home Loan Calculator

Details Required for Home Loan Calculator-

Loan applicants, whether you are a salaried or self-employed person-Home loan calculator is a blessing for you. By entering your basic details whether personal and professional like your PAN Card number, Email address, qualification, total income, name and mobile number, you can easily compute your home loan eligibility.

Accuracy Issue-

The question always comes up at times in the mind of loan applicant -Is the calculator -accurate which I’m using? It should be remembered, more the details are taken into consideration, more the accuracy. So, always check which websites are asking you to enter maximum details. It will help you plan in advance and pay off comfortably.

Comparative Analysis-

Perhaps, home loan calculator is the best arithmetic tool which helps you to recognize your home loan provider. While you start using the different calculator-you can easily spot the difference which providers are giving you for the best deal.

Navigating Hidden Calculations-

Simply by making few clicks on your mouse, you can find hidden calculations like how much you require to pay for the balance transfer to any other bank?

Location of your Home Loan Calculator-

The loan applicants should always make use the EMI and Home Loan Calculator of their own country or for that country where you are buying the property. This is because the local and government rates are levied subsequently and the result would be more authentic.

Amortization Schedule-

A home loan amortization schedule specifies all the essential information that are required towards making your home loan repayments such as loan amount, the period of scheduled payments and outstanding balance. It details about your home loan EMI break-up, repayment of interest information and outstanding principal of the loan. The applicants use the schedule for making decisions pertaining to the prepayment or refinance of a loan and also give details of interest for availing tax exemptions.

Home Loan EMI Calculator Excel-

Home loan applicants can easily calculate their home loan EMIs on MS Excel. They are required to use the function PMT in order to calculate EMIs.

They need to follow the below syntax while using the formula in EMI Calculator in MS Excel.

Syntax : PMT (rate, nper, pv)

The variables used in the above formula are :

rate – Rate of Interest on the loan

nper- Total number of payments for the home loan

pv- Present value/principal