In India, many consider buying a home to be one of the key milestones during their lifetime. However, a lot of them tend to overlook the fact that long-term financial planning is necessary to realise this dream.
Although the planning process may seem overwhelming for first-time home buyers, in reality, it is quite easy. All one needs to do is use a home loan tenor calculator available on the lender’s website.
Benefits of using a home loan calculator
Before prospective buyers move forward to opt for a housing loan, they should consider using an online EMI calculator. It helps to:
- Draw an effective budget
A home loan calculator precisely displays the EMIs providing a clear idea regarding how much one needs to keep aside each month for timely repayments. Hence, anyone can effortlessly manage their financial well-being.
- Determine affordability
While experimenting with different tenors, one will notice that it changes the EMIs and applicable interest amounts. This data serves as a crucial piece of information while the borrower determines a solid repayment plan that aligns with their budget.
- Compare various loan offers
As users enter the varying interest rates, principal amounts and other particulars for different loans, the calculator returns the overall cost for each of the deals. Based on this information, one can finalise the best home loan offer as per their financial requirements.
Steps to properly utilise a home loan tenor calculator
Here are the simple steps to operate a home loan calculator to determine a favourable financial plan:
- Step 1: Feed in the desired loan amount. While entering the sum, one must ensure that the borrowed money is well within their repayment capacity.
- Step 2: Adjust the interest rate. It is important to note that a specific lender can possibly agree to provide the same loan offer to different candidates at varying interest rates.
- Step 3: Adjust the tenor. As per the latest norms, a home loan tenor can go up to a maximum of 40 years.
Note: It is highly advised to select the tenor wisely as although longer tenors result in more manageable EMIs, ultimately the borrower ends up paying more interest.
Tips to get low-interest home loan offers
Here one can check the five proven strategies for reducing their home loan interest rate:
Tip 1: Improve CIBIL score
Lenders automatically tend to offer more affordable loans to borrowers with a good CIBIL score. Therefore, one can improve CIBIL score by not seeking multiple loans at a time, maintaining a low credit utilisation ratio and paying all outstanding bills timely.
These days, any individual can check their credit score online for free by visiting the official website of CIBIL. After fetching the information, they can use a home loan eligibility calculator to get approximate estimates of the amount they can borrow.
Tip 2: Consider a higher down payment
A higher down payment naturally brings down one’s loan amount. Consequently, the applicant gets a loan deal at a lesser interest rate and thus, he/she has to pay lower EMIs.
Also, when someone furnishes a substantial down payment, the respective bank or NBFC gains more trust in them and thus, offers them better terms. Another way to get these benefits is to avail a pre-approved loan. Many lenders are offering these deals for products like home loans, loans against property, etc. The borrower has to provide some details such as full name, contact details, and others to check their pre-approved eligibility.
Tip 3: Opt for a floating interest rate
Borrowers opting for home finance can get a loan either at a fixed interest rate or a floating rate. Though the former stays intact throughout the tenor, the latter keeps on fluctuating according to prevailing market rates.
As per historical data, floating interest rates are lower than fixed interest rates. Hence, one may consider availing a floating interest loan as it has more chances to be less costly in the long run.
Applying the right tactics and being able to use the home loan tenor calculator wisely, will enable a candidate to fetch the best loan deal. Nevertheless, one should properly conduct market research to ensure they receive an excellent value for money.
