How much Home Loan can I afford?
Home loans are a great way to make your dream come true. They help you to buy your own home without much difficulty. It is easy for a person to look for a home but difficult to buy it as property rates are shooting sky high. People slog for years to get a home or themselves but cannot do so as the area they prefer to take a home in, is always out of their budget. You do not have much cash at your disposal so that you can buy yourself a good home as per your requirements in a prime location which would have all the amenities and would give you a standard lifestyle. But you can always find a home in an upcoming area which would have all your requirements. It would take some time for the area to grow in its own perspective but would do. But how can you know how much home loan you can get as per your current stature and income.
Home Loan Calculator
Well the answer is easy, and you can get this even before you apply for a home loan. You can go online and find a home loan calculator which would have all the inputs that are required to know how much home loan you can afford. To get this answer you would need to know how much EMI you can pay. This EMI is an abbreviation of Equated Monthly Installment which is paid by you each month until your loan amount is not cleared.
Home loan is an advance payment made for your dream home and the bank does so to get an interest income from you for the amount you take the loan for. However, you need to be eligible to get the home loan and you must show the income that you currently earn. This can be done by home loan calculator. This home loan calculator is available online with all leading banks and financial institutions that help you get such a home loan. The inputs required to know our home loan EMI are as follows:
Home Loan Principle Amount
Home loan principle amount is the actual loan you apply for in a bank or financial institution. This principle amount is broken down into the number of years you would take the loan for and would be added with the interest component so that your EMI amount can be generated.
The interest rate at which banks and financial institutions would offer you the loan is fixed at the time of loan application. This interest rate can be of two types i.e. fixed and floating. The only difference between them is that the latter is flexible and keeps on changing to give you a good bargain from the banks and financial institutions when the REPO rate goes down. But it can also go the other way around when you may have to pay a higher interest rate and your home loan would get expensive. This interest rate is calculated on a yearly basis depending on the outstanding amount of the principle. It is broken down into the number of years for the tenure you choose.
The tenure of your home loan is also decided when you apply for it. This loan tenure is the total period which you would take to make the final settlement of your home loan. You would have to make a payment of such a home loan for the tenure you fix. The more the tenure the expensive your loan would be and the lesser your tenure the cheaper your home loan would be.
Once all these parameters are input in the home loan calculator online, you would get an EMI generated from the system which would be payable for you for the number of years you decide. This helps you to know the EMI in the first place without even applying for a home loan. So, you can be calculative about how much loan you can avail and what would be the payment structure. Accordingly, you can decide to buy your house and fix the budget as per your investments. This is the reason home loan calculators are so helpful for all.