We all are aware of the fact that the interest rate plays a crucial role in the process of Home Loans. Depending upon the rate of interest, you are asked to pay your monthly instalments. Low-interest rates are considered good for the applicants, whereas, a higher rate of interest can benefit the lender.
The interest rate charged on your Home Loan differs from each lender. Some lenders charge a higher rate of interest and vice versa. Whereas the applicants are concerned, it is suggested to apply for a Home Loan to financial institutions which charge a low interest rate. Thus, researching well before opting for a loan is mandatory. At times, you might come across some applicants who pay higher interest than other Home Loan buyers, which then leads into a financial crisis. A poor research can be one of the reasons here.
After demonetization, many new investors are seen to be keen about real estate investments, although the real estate rates have raised significantly. One of the reasons behind the increase in the number of investors can be, the cut down of repo rates by the Reserve Bank of India (RBI). After the announcement made by the RBI, Home Loans are seemed to be comparatively economical. Being this the case, people have started to give a thought about owning their own house.
How to Calculate your EMI?
Before applying for a Home Loan, it is very important to calculate your Home Loan EMI that you will be paying over your loan amount. There are three major factors that determine your Home Loan EMI: loan amount, interest rate and loan tenor.
The loan amount that you borrow over your Home Loan determines the EMI you will be paying. The financial institution sanctions the loan amount by checking your eligibility criteria. Also, you are offered a loan depending upon your repayment capacity.
As mentioned above, the interest rate is the most important factor to consider when talking about Home Loans. Depending on the rate of interest, your EMI amount can vary. It should be noted that a small change in the interest rate can change your EMI amount.
Depending on the loan tenor you opt for, your EMI amount will change. The lender offers you two options to choose from: long-term tenor and short-term tenor. By choosing a long-term tenor you will have to pay less EMI amount, but for a longer period of time and vice-versa.
After knowing these three factors, you can proceed towards calculating your EMI. You can either calculate the monthly instalments annually or can use Home Loan EMI calculator. To calculate your monthly equated income all you need to do is, enter the digits, and the calculator will give you an estimated result.
By getting your EMI calculated, you can plan your repayments and manage the loan. Also, you can try entering different digits and check what Home Loan interest rates amount suits your pocket. Thus, this will help you to check your repayment capacity. In case, if you still are unable to estimate the EMI, you can also pay a huge down payment. Paying a huge down payment amount can lower your EMI. You can pay up to 15% to 20% of the loan amount to lower your interest amount.
Concluding with, whichever lender you choose, make sure that you are paying a right interest amount on your Home Loan. If not so, then you might end up in a huge monetary crisis which might then result in financial stress. Also, make sure that you pay a low rate of interest to benefit the most from your Home Loans.