Thursday, May 28, 2020

Business

Why Estimating EMI is Essential Before Taking Home Loan?

May 01, 2020 12:12 PM

You can explore the best of places in the world, but you won’t find a place as comforting and sweet as your home. After all, it’s that place where your family creates and sharesmany moments. While a home is a home, whether you live in a flat, an apartment or a villa, what matters is whether you own it or you’ve taken it on rent. Those living on rent aspire to buy a house to be free from the burden of paying rent each month.

That is precisely why you give so much thought to invest in a home, as that will mark an important milestone in your life. Since buying a house is a significant financial expense, you may find it difficult to arrange the exact purchase amount. At such times, taking a loan can be the best solution to finance your home, which you can pay off over the years conveniently.

An essential aspect of taking a home loan is the EMI (Equated Monthly Instalment), which is the fixed amount of the borrowed money you pay off to the lender each month. It constitutes a part of your principal amount and the interest payment on the outstanding sum.

Some factors have a bearing on EMI, and should, therefore, be considered by every home loan applicant. Have a look at these factors:

  1. 1.        Income: Your income is crucial in determining your eligibility for home loans at a specific EMI amount. It is because your income will give the bank or lender an idea of how much payment you will be able to afford each month. Usually, banks ensure that EMI should be less than 40% of your total income.
  1. 2.      Expenses:Before applying for a loan or using an EMI calculator, ascertain your expenses in the future considering your family stage, medical conditions and other vital aspects. It will ensure that you have enough funds to meet other essential requirements while dreaming of owning a home.
  1. 3.      Changes to Rate of Interest: Rate of Interest (ROI)has a direct bearing on the EMI.Since ROI keeps changing with time, you need to keep a check on the same to avail of a home loan at the best time. 

Now you may think why you need to estimate your EMI before taking a home loan.

  • There are two crucial reasons why estimatingEMI before applying for a home loan is essential.
  • TheEMI will depend on the loan amount you are eligible for.

Once the loan is sanctioned, the EMI amount will become a monthly outflow of money for you and thus, a part of your regular expenses.

When you apply to get a home loan, the bank will decide your loan amount after checking how much EMI you can afford to pay. Based on that, they sanction a specific sum of money in your name. On your end, you can use an EMI calculator to get an idea of how much money you will need to pay back every month.  An EMI calculator can serve as a useful tool for you, as that will help you know your affordability, after which you can apply for a reasonable loan amount. 

The essential benefits of using EMI calculator for estimation are as follows:

  • It will help you in determining the loan amount you should apply for.
  • It will assist you in checking your eligibility as well as the interest percentage.
  • It also helps in deciding the right tenure of the home loan.
  • You will be able to make comparisons between what different banks are offering and pick the one that offers you a loan with maximum benefits.
  • It will help you decide between a floating and fixed rate of interest.
  • It will make the process of getting a home loan easier and fast as an estimated EMI amount will ensure that there is less back and forth, resulting in less documentation or chances of rejection.

 Use an EMI Calculator to Get theBest Home Loan

A home loan can act as the perfect bridge between you and your dream home. Use an EMI calculator to ensure that you can get the most suitable home loan planandcan pay the EMIs smoothly.Reputable financial institutes like Axis Bank, provide home loans for a tenure of up to 30 years and at attractive flexible and floating rates. While applying for home loans, you can also use the EMI calculator offered by them to avail of the right loan amount. Using the EMI calculator will allow you to choose the best plan prudently, considering various aspects.Take the right home loanand create happy memories!

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