Understand the Home Loan EMI Calculator
These days everyone wants to own a house though they don’t have the full cash to buy it. The task of buying and owning a house is not anymore a big deal as there are 100’s banks and financial institution ready to provide you with a home loan which one can avail and buy a house. While taking a home loan it became very important to understand and calculate the interest rate, EMI and the total loan amount you would be paying at the end of the loan tenure.
To calculate the home loan EMI everyone has an access to EMI calculator which can be used to calculate and understand what would be monthly payment amount that one is going to pay for taking a home loan.
There is certain information one need to have to calculate the home loan EMI, they are as follows;
- Purchase Value (PV) – Actual value of the house while buying it
- Advance Payment (AP) – Payment that the buyer going to pay the seller. Generally, a certain percentage of down payments will be paid for one’s own pocket and remain will be taken as a loan. It could be either 10% or 20% depending on each one’s ability to pay.
- Insurance Value (IV) – The insurance amount that buyer planning to take. This may or may not be there
These three details will able to give you the actual loan amount;
(Purchase Value (PV) + Insurance Value (IV) – Advance Payment (AP) = Loan Amount)
- Rate of Interest – The amount of interest charged by the bank or financial institution.
- Processing Fees & Charges – The amount payable as administrative charges, service taxes, fee etc. need to be also included while calculating the EMI.
Apart from these three other expenses which are generally incurred by the buyers of the houses such as registration fee, stamp duty charges, other unrecorded expenses, furnishing expenses and much more, property taxes which is generally paid annually to the municipal body and the usual monthly maintenance expenses which will be incurred by the owner. All these expenses should also be included and considered while taking a loan and hence needed while calculating the EMI.
Once these details are available when the buyer can enter these details in calculating the home loan EMI which he or she needs to be pay on a monthly basis. This detail will also give awareness to the buyer as to whether these expenses can be afforded and paid by them regularly and take decisions accordingly.
Most of the time the banks or any other financial institutions will not give these detailed explanations and only consider the actual house value and based on which the loan is calculated. But from the buyer perspective, it is important to consider all the above-mentioned expenses while availing for a home loan and then calculate the EMI.
Lastly while calculating one can also consider if required about the loan pre-payment possibilities. Generally, all the home loans come with an option that one can make a prepayment that is extra amount than the EMI if possible as that extra amount will go the principal. This will enable one to bring down their EMI paid monthly.