Are you planning to buy a house with the help of a home loan? But high property prices and non-availability of funds are hampering home buying. Access to finance in the form of home loans becomes a boon for the common man. However, a home loan or any type of credit, comes with a lot of responsibilities attached to it.
Everyone should have a transparent idea of their finances before borrowing a large sum of money. Getting a home loan requires advance planning as it involves a relatively long term and can strain the household finances for an extended period of time. Calculating your EMI amount before signing the line is a good idea. A great tool like Home Loan EMI Calculator can help you with this.
What is Home Loan EMI?
Before understanding the house loan EMI calculator, it is important to understand the basic information about what home loan EMI is because if you don’t know what you are calculating, then your time to learn about the calculator will be a complete waste.
EMI, short for Equalized Monthly Installment, is a fixed monthly amount that you pay every month to repay the amount borrowed from the lender. Many people cannot pay the entire amount in one go to buy their dream home, so they opt for easy EMI facility which can be a flexible repayment option.
Home Loan EMI Calculator
Now that you know about Home Loan EMI, it’s time to introduce you to the popular HFFC Home Loan EMI Calculator. This calculator helps you estimate your EMI amount with the help of some basic details like all other calculators, it evolves on the inputs that you only give it. In case of HFFC Home Loan EMI Calculator, it requires only three inputs – loan amount, interest rate and tenure. As you enter these details in it, you will get the required output due to EMI amount. The method of using it is so easy that it is always used by anyone.
Home Loan EMI Calculator Formula
The EMI amount can be found with the following numerical equations:
EMI Amount = [P x R x (1+R) ^N]/[(1+R) ^N-1], where P, R, and N are variables, indicating that whenever any change in the 3 factors The EMI value will change every time you do so.
P, means ‘Principal Amount’. The principal amount is the first loan amount given to you by the bank, based on which the premium will be determined.
R represents the interest rate set by the bank.
N denotes the number of years for which the loan is taken. Since EMIs are paid every month, the duration is determined in number of months.
Factors Determining Home Loan EMI
Principal – Principal is the loan amount that is availed to you by the loan specialist. It is directly proportional to your EMIs – lower principal will bring down your regularly scheduled payments and vice versa.
Interest rate – Interest rate is the rate at which money lenders lend to you. It is directly proportional to the increase in your loan EMI estimate.
Tenure – Tenure is the time in which you will repay your loan. Tenure is inversely related to your home loan EMIs – longer periods make regularly scheduled payments less expensive and vice versa.
Advantages of Home Loan EMI Calculator
Simplicity and Speed: Using the HFFC Home Loan EMI Calculator doesn’t require complex multiple values, in fact there are only three simple details that you generally need. Simplicity is its best feature and you will get flash led which makes the whole process of EMI calculation easy and hassle free.
Money Management: Once you have a transparent assessment of the EMI amount, you are more prepared to make some changes in your monthly expenses, so that you can easily forget that EMI amount from your monthly income. EMI calculator helps you financially empower yourself by giving you quantitative results.
Infinite flexibility: You will be ready to use the calculator as long as you want with different values as long as you buy the right combination of EMI and tenure along with the monthly income. This infinite flexibility feature of EMI calculator makes it essential to use it before finalizing the loan amount. Remember that choosing a shorter term will yield a higher EMI and hence the other side of the round.
Amortization Table: The calculator not only provides the EMI amount, but also provides an amortization table through which you can estimate the principal and interest amount at different points in the tenure of your loan. With the help of this, you can also visit the bank for verification if you want to understand the estimate about a payment you need to pay easily.
Tax Benefits of Home Loan EMIs
Taking out a home equity loan is often expensive, but it also has certain benefits, especially when taxes are involved. The government provides tax relief through the Income Tax Act, 1961 on the EMI you pay annually. These are as follows:
Section 80C: You can claim tax exemption up to ₹ 5 lakh per annum on the principal amount paid for your property loan.
Section 24: Under this section, you can claim a deduction of up to 2 lakhs on the interest component of your annual repayments.
Section 80EE: Under this section, you can claim excess interest amount up to Rs.50,000 per annum. This is often over and above the amount mentioned in sections 80C and 24. This deduction is subject to certain terms and conditions.
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