Home loan EMIs can take a big chunk out of your budget when you’re repaying the loan. In 2017, it was reported that about 1% of people with home loans couldn’t make their payments on time. If you don’t figure out your EMIs beforehand, you might find yourself financially strained during the repayment period. A home EMI calculator can help you understand how much your EMIs will be, allowing you to make informed decisions.
Managing your home loan payments requires a bit of planning. Here’s what you should consider to keep your finances balanced.
Net income: Your monthly income is crucial. If you earn more, you can handle larger loans more comfortably. If your income is on the lower side, you might need to borrow less or extend your loan term to make it manageable. Remember, banks only give home loans to people who meet certain income criteria.
Watch your spending: When using a housing loan EMI calculator, remember to factor in future expenses like medical bills, education costs, and family needs. Ignoring these can lead to financial stress if your monthly payments are too high.
Living standards: Think about your current lifestyle costs, such as bills, rent, and groceries, which can eat up a large portion of your income. If you want to pay off your home loan faster, consider reducing these expenses.
Loan term: If you’re able to commit a significant part of your salary to EMIs, opt for a shorter loan term to clear your debt quicker. If that’s not feasible, choose a 15-20 year term for manageable monthly payments.
Interest rates: Home loan interest can be either fixed or floating. Fixed rates are usually higher, while floating rates change with the market. Based on your financial situation, decide whether you’re more comfortable with the stability of fixed rates or the potential savings with floating rates. Your income and credit score will also affect the interest rate you’re offered. Lenders often prefer a CIBIL score of 750 or higher.
Before taking out a home loan, use an EMI calculator. It can help you decide on a loan amount and repayment term that aligns with your financial capacity. This tool will show you your monthly payments, helping you ensure they won’t overextend your budget. Make sure you have enough funds after covering your monthly obligations and use the calculator to prevent EMIs from impacting your planned expenditures negatively.
