Calculate your home Loan before you Apply for it

A home is where you can relax and make yourself comfortable. It is one place which everyone tries to buy and possess in their lifetime. It is a prized possession and you should plan to do so as soon as possible. But with the high prices for realty, it is difficult to look at the buying a home for your consumption unless you earn well. For the average crowd that comprises of the major population, buying a home is equally important when compared to affording one. You can do so when you avail for a home loan which is easily available in today’s competitive market.

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How to apply for a home loan?

A home loan can be applied when you have the right amount of funds for paying the hefty EMI that arises from such loans. But before that you need a few more things for which you need to save big time. You save a good amount of money to buy a home and for that you need an initial amount i.e. the down payment. This down payment is at a percentage of 20% on an average of the total house amount and the rest is paid by the bank in full for your loan. This loan is only disbursed when all the necessary formalities are completed, and it is approved by the bank officials.

You need to look at options for banks and financial institutions that would give you good EMI for a home loan. When you categorize that, you can proceed with all the formalities for documentation and then apply for the home loan. But before you do all these procedures, you should find out more about the home loan and how much would it cost you. This would help you to plan for your finances in advance and decide for future.

How does a home loan EMI calculator work?

A home loan EMI calculator is easily available online and can be used by an amateur too. It is very easy and simple in interface. In fact, it has a lot of valuable information that you would see could help in future. The best available UI for a home loan EMI calculator is the graphs and charts. It is said that a visual presentation is always great and keeps fresh in mind for long. This is the reason all explanations of such kind are done through presentations. The calculator has three components that need inputs. These are the loan amount you need for buying your dream home, the rate of interest at which you would take it, and the number of years that you would need to repay it.

Once you enter all such details, you would be given an output of the EMI you would have to pay on regular basis and the interest amount along with the total of principle and interest amount to know the exact value of the loan that would cost you. These numbers are also represented in the graphs so that you can know what the amount is you spend as compared to other banks and financial institutions.

How do I know if the loan is right for me?

It is very easy for you to apply for a home loan and get a n approval. The process is simple and sorted but the backend work is an important task in such a case. You need to be vigilant on all the market conditions and then look at applying for a loan. First you need to check if the property title is clear or not. If this is clear, then you can go ahead with the loan. There is a lot of fraud happening on the builder lobby which can dupe you of the hard-earned money and get you to streets. The loan component is the interest that is charged by the bank. This is the real reason on banks approving you loan. So, be very cautious on this parameter and know all that you can about such topics.

Interest Rates

Interest rates are of two types and they should be used known to the user in detail. These two forms are floating and fixed interest rates. Let us take a deep dive to know about it a little more. Usually a home loan is taken at a floating rate rather than the fixed rate. This is because, the floating rate is more beneficial to the user in the long run. The fixed rate interest component and the principle amount would never change until it is completely repaid and for a floating rate, it is not the same. You can change the rate f interest as and when the repo rate changes. Your interest rate can go down as well as come up by a few decimals which would help you to repay the loan at a lesser rate and make savings. In such a case, many times, the user also reduces the tenure and keeps the EMI amount same. So, ensure you have everything noted and make a use of that information to save some money from home loans.

You can also look at the many ways to reduce your term for repayment so that you may get a reliever. This can be done by paying some amount over and above your EMI. It would go against your principle loan and you can look at reducing your loan tenure accordingly. There are many other options where you can get benefits. These can be shifting the loan from one bank to another where the loan interest rate is lesser than the previous one and it would help you to save on money. If you plan to make a full payment for your outstanding loan, then it can also be done through pre-payment. This would attract some extra interest over the balance principle amount but would be lesser than the actual payment amount. IT has been observed that on an average a person pays almost double of what he/she takes from the bank and financial institutions.

Frequently Asked Questions

Q. What is a Home Loan?

A. A home loan is an advance cash taken by a bank or financial institution so that the user can purchase a home or an office or many be a plot or land to build a structure. This loan is approved only when all the criteria is met by the user.

Q. How can I calculate home loan EMI?

A. A home loan EMI can be calculated using the online calculator. It is a great tool and completely dependable so that you need not run from one desk to another to know how much you owe the bank in case of a home loan.

Q. What is the home loan tenure?

A. The ideal home loan tenure is from 10 years to 30 years at the maximum. This would mean that the longer your tenure is the lower will be your EMI, but higher would be your interest amount. This makes the loan expensive and the user must pay higher amount. This could go more than double of what a person takes as compared to principle amount.

Q. What is the Loan Amount I can avail?

A. Loans are usually provided at an average of 80-85% of the home cost. The rest is expected to be paid by the user as a down payment. This depends on the banks and profile of the user. However, you can check the eligibility criteria based on the age, income, family income and number of dependents from a loan borrower perspective. But you can also check your loan affordability with the use of a calculator available online. It would help you to know how much loan you can take based on your payment capacity.

Q. What should be my EMI as per financial needs?

A. This is a personal question which should be answered by the user. However, as per the regular practice, the user should pay an EMI of about 40% from the income they have on monthly basis. This would ensure that the other expenses are also meet and the user does not feel the pinch of it. This way you can calculate it backwards on how much loan you should apply for o buy a house. You can go ahead of this amount as well if you have the finances in place and expenses are lined up. This needs to be planned so that you do not feel the pain in the coming months. Also, many banks do not offer to take an EMI more than 50% of your income so that you can plan your expenses well.

Q. Can I increase my home loan eligibility?

A. You can increase your home loan eligibility by adding your active earning spouse or parents or even children to take more loan. This is a good way to spread the benefit of loan repayment and the taxation benefits as well. If your bank stops the loan eligibility to 85% then you may add this option and take up the loan for purchasing your dream home.

Q. How can I reduce my home loan EMI?

A. Hoe loan EMI can be reduced at only one point, when you increase your tenure of the loan. This would reduce the EMI and put pressure on the longevity of the loan. It would also make your loan more expensive as you would pay for a longer term.

Q. Can I refinance my home loan?

A. Home loan can be refinanced through other banks and financial institutions. You need this option only if you are not happy with the current services or need a revised interest rate. In such a case, the prepayment charges need to be paid by the user for pre-closure. If this pre-closure is from your finances completely, then some banks may waive off this value. But only subject to bank official’s discretion. In other cases, the penalty is a percent of the outstanding loan amount.

Q. Is insurance necessary for a home loan?

A. You can and should insure your home from any kind of unforeseen events or natural calamities. This is important as home is a big asset and very expensive as well. You would have to pay a huge amount if anything happens to your home. While your home is hypothecated to the bank, they would be the beneficiary of such insurance. However, this beneficiary would be changed to your name once the loan is completely paid off.

Q. Is my Home Loan insured?

A. This is a great benefit you have for your family. This was not compulsory in the past but is now. So, when you take an insurance for your home loan, you would be insured for it and any unforeseen event would be covered by the bank. You need not make a payment for the remaining EMI of anything happens to the loan borrower and the house would be transferred in the name of the successor.

Q. What are the tax benefits of a home loan?

A. Many people take a home loan despite of them being financially sound. This helps them to plan their taxation. They get a rebate on the taxable amount for both the interest and the principle amount for a fixed amount. This keeps on changing as per the taxation laws and the revisions that happen in the year. Also, it can get your taxable income to zero or a negligible amount as well.

You can apply for a home loan through all major banks and financial institutions and get the home loan EMI calculator online to know what your equated monthly installment on regular basis would be. All such tips would help you to apply for a home loan with ease and give you all the benefits that one should get. Home loan is a necessity in today’s time and you should look at availing it as soon as possible. So, make the most of such a setup and apply for a home loan today.