A home loan eligibility calculator computes your EMI instantly based upon your added details. It also shows overall interest payment, overall principal payable, and the amortization schedule to assist you to plan out your repayments for home loan in a better way after factoring in your repayment potential.
Why is it necessary to use home loan eligibility calculator?
A home loan eligibility calculator is a tool that provides you with an estimate about the loan amount you are eligible to avail. Before you apply for a home loan, knowing the appropriate amount you can apply for enhances your chances of securing loan approval. Note that the calculator provides instant results based upon your income and repayment potential, which it evaluates using the details you input like your age, fixed monthly obligations, etc. However, before approving your loan request, lenders also factor in other housing loan eligibility criterialike your financial position, credit score, location, employer, etc.
While certain parameters might differ from one lender to another, there are few basic parameters most lenders may ask for. These include:
- Your location
- Date of birth or age
- Loan repayment tenure preference
Few lenders might also ask details for your current loans that you are servicing.
How does a home loan eligibility calculator work?
This calculator uses a mathematical formula to assess your eligible loan amount based on the added details. Such details may include your gross monthly income, existing monthly loan obligations, loan tenure, offered home loan interest rate, etc. Upon provision of the data, the home loan eligibility calculator gives you instant results. Alternatively, there are also basic home loan eligibility calculators where you just require adding 3 crucial data -namely your loan amount requirement, offered interest rate and preferred loan tenure – and based on that your EMI calculation will show up. If the EMI falls within your repayment capacity, you can opt for the offer, otherwise you can make changes to any of the 3 values to derive a suitable EMI.
What are the benefits of a home loan eligibility calculator?
- Provides instant results
The calculator cuts short the lengthy and tedious calculation to seconds. EMIs are computed instantly, which helps you better understand your repayment capacity. In case the EMI is on the higher end, you can apply different permutation and combinations to loan amount, tenure, and interest rate to derive a suitable EMI as per your preference.
- Helps compare different home loan deals
The calculator can be used to compare home loan proposals from various banks. The result in the calculator usually shows 3 results, firstly your EMI, overall interest cost and overall loan cost. Knowing these figures beforehand allows you to opt for the most prudent option.
- Choose the correct repayment tenure
Changes in the repayment tenure can affect your EMI considerably. Thus, before deciding, give this aspect a thought. If you have the potential to opt for a higher EMI, choose a shorter repayment tenure to repay your loan as soon as possible. Note that for loans with lower repayment tenure, the overall interest outgo is lower.
Ensure to use the home loan calculator to make an informed decision and remain a step ahead. Once you have computed your EMIs, you can simply apply for a home loan with the preferred lender online.