Tagged: home loan eligibility calculator

Do the Exact Calculations Easily with Home Loan Eligibility Calculator

Buying a home is a dream of many, but actually not many are able to fulfill that due to lack of finances. Money plays a pivotal role in fulfilling the wishes, if you don’t have money in hand, a wish will always remain a wish, you would not be able to fulfill that. However, if you have a wish of buying a dream home, and don’t have financial support, nothing to worry as you have an option of a home loan. Yes, that’s right! Availing a loan is undoubtedly one of the best ways to get closer to your dream home as it allows you to fulfill your dream in a hassle-free manner. But, one thing that needs to be mentioned here is the fact that before you avail this sort of loan facility, it is important that you should know the eligibility for the same.

Yes, to avail any sort of home loan you need to meet the eligibility criteria set by the lender. Now, when we say home loan, there are plenty of lenders available in the marketplace, which offer finance for the same, but With different eligibility norms. You need to fit into that criteria in order to become eligible for a loan. There are different eligibility parameters you need to match i.e. age, income, job/business stability, total years of work/business handling experience, previous loan, monthly expenses, relationship with the lender, employer category, etc. Yes, these are the few important parameters that lenders always keep in mind while availing you the loan.

home loan eligibility

Now, if an individual meets all the parameters set by a lender, it does not mean that he/she will get the required loan amount what he/she is looking for. Deciding the loan amount eligibility of an applicant/borrower is all together a different ball game, which most of the lenders calculate differently. Yes, different lenders calculate the loan eligibility of an applicant differently, based on various points. But, the easiest way to know the same is via home loan eligibility calculator. This smart, effective and time-saving tool allows you to know your exact eligibility of the loan amount in the most hassle-free manner.

Let’s just get more clarity on the same with the help of examples below. We are going to compare two scenarios here to have a better understanding  of the same.

Scenario 1: Akash Sharma, a 26-year-old, Software Engineer by profession earns a monthly income of₹50,000. He wants to buy his dream home in New Delhi, hence for the same, he has applied for the same. He has the monthly expenses of ₹20,000, which means he saves more than half of his income i.e. ₹30,000 each month. Now, after looking at his profile one lender is ready to offer him the 90% of loan amount by looking at the perspective that he can easily repay the same amount as he has the savings.

Scenario 2: Avinash Aggarwal, an Assitant Casting Director is also 35-year-old and gets a monthly income of ₹30,000. He is looking to buy a home in the capital itself, thus has applied for a loan. Avinash spends half of his income i.e.₹15,000 to manage the monthly expenses, which means he saves ₹15,000 each month. Now, in his case, one lender has also agreed to offer him the loan, but not the same loan amount what he is looking for. He will get only 60%-70% of the loan amount he wants to avail.

Now, many of you must be wondering why Avinash will get the minimum loan, which is not the case with Akash. Well, the reason behind the same is the fact that there are various factors that worked in the favour of Akash.

  • Akash’s income is higher than Avinash.
  • He is younger than him, which means Akash can continue the loan for a longer tenure.  
  • The monthly expenses-Avinash’s monthly expenses are higher than Avinash.
  • Savings- Akash’s savings are higher than Avinash, which is also a deciding factor here.

However, if you carefully read these points, these are the same parameters, mentioned above in the article, that help in deciding the eligibility of a borrower. Now, what is the exact amount both the applicants will get? I am sure you are curious to know?

Let’s just use the technique how most of the lenders via home loan eligibility calculator computes the loan amount of the borrowers. For your reference, we are calculating the eligibility for ₹1 Lakh.

Scenario 1: Akash

Loan Amount: ₹ 1 Lakh  

Tenure: 20 Years

Interest Rate: 8.60% per annum

EMI: ₹ 874

So his calculation would be:

₹1,00,000 x 20,000(savings)/874=₹22.88 Lakh (approx.)

Scenario 2: Avinash

Loan Amount: ₹ 1 Lakh  

Tenure: 20 Years

Interest Rate: 8.60% per annum

EMI: ₹ 874

So his calculation would be:

₹1,00,000 x 15,000(savings)/874=₹17.16 Lakh (approx.)

So, now you can clearly see, how the calculation of the applicants took place. Akash is eligible to get the higher loan amount here. And, this is how usually the lenders calculate or decide the loan amount eligibility of the applicants.

Benefits & Types of Home Loan Calculator

A home loan calculator would include the eligibility calculator, interest calculator or EMI calculator and the amortization calculator. With the help of these calculators, an individual can know each and every detail of the loan he/she has taken. The advantage of using these calculators is that you get to know your loan affordability with the help of which you can take the right decision.

In this article, you will get the little description of each of the above-mentioned calculators:

EMI Calculator:

A home loan EMI calculator is also popular with the name interest calculator. It is the tool that is used to calculate the monthly installments of the loan. The major advantage of using a calculator is that you get accurate results instantly. Other than the accuracy, you get the advantage of knowing in advance, not only the EMIs or the equated monthly installments but also the total interest outgo and the total amount (principal+interest). This tool takes into account the following details:

home loan

  • Loan amount
  • Tenure
  • Interest rate

On the basis of the above data, this calculation tool would give you the details of the EMI, Total Interest Outgo, and Total Amount. For instance, if you are taking a home loan with the below details:

  • Loan amount- ₹20 lakhs
  • Interest rate- 8.50% p.a.
  • Tenure- 20 years

The payment details will be as follows:

  • Monthly EMI- ₹17,356
  • Total Interest Outgo- ₹21,65,552
  • Total Amount (Interest + Principal)- ₹41,65,552

The calculator is easy to use and gives accurate results within few seconds. Hence, it is time-saving and customer-friendly both. Also, there are n number of online EMI calculator for home loan available in the market that you can use according to your convenience. Most importantly, the calculator gives you the option to check the monthly installments n number of times before applying. With the help of this, you can change your mind if you find the loan out of budget instead of getting stuck with a decision that might not be so pocket-friendly. Also, it is important to note that the calculators do the calculation without adding the processing fees. As you know, there is a certain processing fee included other than the interest rate which is generally 1-2% of the principal amount. So, if you will know the monthly installments, you can add the processing fees into it and then take the right decision.

Amortization Calculator:

An amortization calculator is interconnected with the EMI calculator. The difference between an interest calculator and amortization calculator is that the first one is used for the calculation of monthly installments and the second one tells you the annual interest outflow at the end of your tenure. In simple terms, for the above loan details, the amortization table would tell you the detailed information for each year until the 20 years of tenure. It will give you the details of the principal, total interest outflow and the balance amount of each year.

The importance of this calculator is that it gives the borrower the idea about the future payments he/she will have to make and if possible he/she can initiate the foreclosure process and close his/her loan.

 Eligibility Calculator:

The eligibility calculator is the calculator that helps the applicant know his/her loan eligibility. Since the interest rate and the loan amount that an applicant get on a particular loan are subject to change from lender to lender and from an applicant to applicant. Having said that, the eligibility calculator takes into account the following details:

  • Type of employment
  • Monthly salary
  • City

After you will fill up the above details, you will get the list of options that you are eligible for. You can check your eligibility with the help of the home loan eligibility calculator as per your convenience and profile in just a few seconds.

Crux of the advantages of using calculators:

  • Time-saving
  • Accurate results
  • Flexible Options
  • Comparison facility
  • Convenient

Thus, it is quite clear that different types of calculators have different benefits and the usage. So, using these calculators in is also the right thing before applying for a home loan.