When it comes to mortgage loan repayments, Equated Monthly Instalments are regarded as a convenient repayment facility offered by lenders. Under this facility, borrowers can repay the total liability towards a mortgage loan amount via stipulated numbers of monthly payouts. However, it can also increase the risk of defaulting if not opted for in suitable proportion to one’s monthly income. Thus, a detailed analysis of monthly earnings and necessary financial obligations is mandatory before considering the instalment amount.
In such a case, EMI calculation can be useful to assess future expenses towards loan repayment and manage your personal finances efficiently. However, manual EMI calculation may seem challenging to individuals and may not always bring accurate results. Therefore, aspiring applicants can use an online mortgage loan calculator to come up with the most suitable EMI amount as per their repayment capacity. Here are some vital aspects of EMI computation and the utility of an online calculator for simplified instalment estimation.
Impact of loan components on the EMIs
A mortgage loan EMI can be affected by three essential aspects.
- The loan principal
It is the total amount that individuals borrow from a lender against asset mortgage. A change in the principal amount is directly proportionate to the EMI value, meaning an increase in the loan amount also increases the EMIs and vice versa. So, borrowers should be careful when considering the loan amount.
For example, for a loan against property, the sanctioned principal can go up to Rs.3.5 crore. So, borrowers should input the various loan principals to check the EMIs and opt for an amount that keeps the instalments affordable.
- Rate of interest
Loan interests are determined by lending institutions to cover their financial risk. The rate can, however, vary across lenders as per their policies and existing market trends.
So, a systematic exploration and comparison of present options can be beneficial to avail an affordable rate of interest that keeps EMIs within one’s repayment capacity.
- Loan tenor
A loan tenor signifies the entire duration of the availed funds until wholly repaid. This period can differ across lending institutions. Generally, an extended repayment timeline helps to keep the EMIs affordable. However, the overall interest accrual on the loan amount increases. Contrarily, a short tenor means increased EMI burden but early repayment and reduced interest accrual.
A mortgage loan EMI calculator assists borrowers in determining the ideal tenor for their loan against property or any other mortgage finance. Applicants can enter alternative tenors to arrive at different EMI amounts and determine which one suits their repayment capacity the most.
Easy EMI estimation with a mortgage loan calculator
When estimating the instalment for mortgage advances like LAP loan, it is useful to understand its calculation. The following describes how a mortgage loan calculator accurately computes EMIs as per the loan amount and tenor selected.
Formula of EMI calculation –
EMI = [P x R x (1 + R)^N] / [(1+R)^N-1]
Where,
P = Principal loan amount
R = Monthly applicable interest rate
N = Number of monthly instalments
For example, if the mortgage loan amount is Rs.20 lakh at 12% annual rate of interest for 10 years, the amount of EMI would be –
[20,00,000 x 1 x (1 + 1)^120] / [(1 + 1)^120-1] = Rs.28,694
Once you input the loan amount, tenor and interest rate to the mortgage calculator, it utilises this formula for accurate EMI estimation within seconds.
Benefits of a mortgage loan calculator
Individuals should know the advantages of a mortgage loan calculator so they can use this tool to maximise the benefits of their selected loan and service it affordably.
- A mortgage advance comes with a repayment liability over an extended tenor and engages a sizable payout. So, loan affordability is one of the essential factors to be considered as it can impact one’s long-term finances. With this loan calculator, individuals can accurately estimate how affordable an EMI option can be and pick accordingly.
- This simple calculator also helps borrowers to decide what loan amount they should obtain as per their repayment capacity.
- Besides, if borrowers are looking for a LAP loan foreclosure, this handy tool can be useful to figure out whether prepayment would be cost-effective or not as it also offers a look at the amortisation schedule.
Also, while availing mortgage loans, borrowers should prefer financial institutions offering affordable interest rates, balance transfer facilities, etc., for efficient loan management.
Moreover, lenders have also come up with pre-approved offers that help in quick loan processing. Individuals can find these offers on home loans, loans against properties, and several other financial products. They can look at their pre-approved offer by submitting their contact number and name.
As for mortgage loan calculators, individuals can access them online at some reputed lenders’ official website. They can utilise this convenient computing tool to secure an affordable yet efficient repayment option for their property loans.
Moreover, applicants should also be aware of the factors that affect the interest rate for loan against property and avoid those habits that can damage their eligibility. This should help in availing competitive rates and further increase loan affordability.
