Home Loan Calculator- Check Loan Eligibility In 3 Simple Steps

 

 


Moneycontain Home Loan calculator is helpful for not only knowing EMI but mortgage loan as well, which is also known as Loan Against Property (LAP).

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What Is Home Loan?

Before using above home loan calculator, you should be thoroughly aware of what exactly a home loan? Different types of Home Loans and other hidden things which usually is not known in open.

Home loan, helps any individual to borrow money from a bank or a non-banking financial company(NBFC) on certain interest rate.

People mostly avail home loans for buying a house or a flat. However, they may also avail home loans for buying a plot of land for constructing their house.

Other reasons for taking a home loan may be for extending, renovating, or repairing their existing flat or house.

While the lender (Bank or NBFC) provides the loan, they consider the home or the property as the collateral (guarantee, security) for the loan amount you take.

If the borrower (you) defaults on payment or does not pay, the lenders (bank) has the right to liquidate (dissolve) the property and can recover their loan amount.

 



 

What Is Home Loan Interest Rates?

Interest is the cost of borrowing money for your home as a loan from lenders.

Applicants for home loans have to pay back at adjustable or fixed interest rates and other payment terms set by the bank or non-banking financial company.

Lower the interest rates for your home loan lower will be the total amount you pay.

For example: suppose you bought a home loan of ₹ 1,200,000.00 At, Interest rate of  9.0 % with tenure (in years) 5 than your EMI for every month with Principal & Interest is  ₹ 24,910.00

If you calculate the total money you paid at the end of the tenure multiply the EMI of every month with total tenure, which in above case is
₹24,910.00*60(5 years)
= ₹14,94,600
so the interest you paid in total over your loan is
14,94,600-1,200,000.00=2,94,600

On the other hand, if you can get the same loan at lower interest let say 7.5% instead of 9% than, monthly EMI will be ₹ 24,046.00 and the total interest you would have paid is ₹ 2,42,760, you would have saved around ₹51,840.

That is why you should pay close attention to which lender you are choosing and compare them to get the lowest Rate of interest to pay for your loans.

Which Home Loan Is Best In 2021 In India:

Here are home loan interest rates offered by top banks for salaried individuals:
Home Loan Calculator- Check Loan Eligibility In 3 Simple Steps
With the change in repo rate by the RBI, the interest rate gets changed by the bank, hence check the lenders official website and current listed rates.
For example, you can check what ICIC Bank current home loan interest rates here.
Other than bank non-banking financial company (NBFC) also provides home loan at affordable rates.

Top 20 NBFC in India In 2021:

 

top 20 NBFC in India In 2020

 

What Is An EMI?

EMI stands for equated monthly instalment. It is the total amount payable every month until the loan has been fully repaid. EMI consists of a principal amount and interest on the loan.

The principal amount is the original loan amount given to you by the bank, on which the interest will be calculated.

How is principal and interest split in EMI?

Home loan, EMI comprises two components, such as principal and interest rates. The interest component is higher in the initial years and reduces over the years.

When you pay an EMI, all the interest is first paid, and the remaining amount is considered as principal. Every month the interest is calculated on outstanding amount.

Suppose you have taken Rs. 1 Lakh loan for 12 months at 12% rate. The EMI for the loan will be Rs. 8,885.

Interest component in 1st EMI = (12/12*100)*1,00,000 = Rs. 1000
Principal component in 1st EMI = 8,885 – 1,000 = 7,885

In next EMI, the interest amount will be calculated on an outstanding principal of 1,00,000 – 7,885 = Rs. Rs. 92,115. By the end of the tenure, the interest component will come down to zero and the amount you pay as EMI is the remaining principal. This is how interest and principal split in EMI.

 

 

Home Loan Calculator Formula?

It becomes difficult to calculate your loan EMIs manually as the process is time taking and difficult.

If you want to calculate your EMI you only need to enter your loan amount, interest rate to be charged and tenure of loan. The formula used by home loan calculator is:

P*r* (1+r)^n/([(1+r)^n]-1)

In above formula, P is the loan amount that you want to borrow
R is the rate of interest per month
N is the tenure of loan repayment in months

When you use the above formula, you will get the same result that you will get in the Home loan calculator. It is advised to use home loan calculator as it is very easy and time saving process and helps you in calculating your EMI in seconds.

Use Home loan calculator to get the complete schedule of your EMIs along with principal and interest component in it.

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How Accurate Is Moneycontain Home Loan Calculator?

Moneycontain home loan calculator is as accurate as HDFC Home loan calculator, you can check on their official website and can compare the values here.

 

Home Loan Calculator Benefits:

Home loan EMI calculator has multiple benefits, which are listed below :

Saves your time : You can easily calculate your EMIs immediately through home loan EMI calculator which can save your time.

You are required to input basic details like loan amount, interest rate and tenure to get the detail.

Give accurate results : If you are doing manual calculations then there are higher chances of getting wrong results which can change your home loan EMI. Hence, you are advised to use online EMI calculator for home loan to get correct results.

Plan your finances : Home loan calculator not only calculates your EMI and shows how much EMI amount is to be paid to the bank. It also gives you the break down of the total interest you paid with total payable amount. Moreover you can also calculate other charges like home insurance, property tax or PMI.

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Home Loan Eligibility Criteria?

Home loan affordability is influenced by a many factors such as those given below:

Age: A younger individual has a higher chance of getting a higher loan amount approved as compare to an older individual, as a younger person will have more years ahead and with time his chances of earning may increase.

Income: Your income is also an important factor in your home loan eligibility.

Income stability: An individual with a steady and stable income (government) is more likely to get a loan than one with an irregular income(private).

Expenses: Your monthly expenses will also be an factor for you to decide how much loan you can afford. So try to keep it low

Existing EMIs: If there is already an existing loan, than you have to be balance and get rid of that as soon as possible, however if you have paid it without any default this shows the credibility to the lender.

Credit score: A higher credit rating makes the loan approval process faster and easier and vice versa.

Rejected loan applications: If you have had prior loan applications on which you have defaulted, it will negatively impact your credit score, thus reduces the chances of fresh new loan.

Collateral/security: Any collateral like land, gold any fixed investment(FD) that can be used as security will increase your chances of getting a loan and a higher amount as a secured loan is a lot less riskier than an unsecured one.

 

 

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How to Transfer Home Loan to another Person?

When a borrower has a ongoing home loan, but he/she wants to sell off his or her property against which they have taken the home loan, and the buyer(another person) wants to take the home loan from the same lender, an internal home loan balance transfer takes place.

During a home loan balance transfer to another person, the bank or lender remains the same, but the parties or applicants change.

A home loan transfer process has some prerequisites that the applicant has to meet. The existing home loan borrower must provide a letter requesting foreclosure of their loans in place of selling their property.

A No Objection Certificate (NOC) is also necessary from the developer or authority for a successful home loan transfer process.

The existing home loan is closed off with the proceeds of the newly sanctioned home loan amount.

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What Is The Difference Between Home Loan and Mortgages?

Many people get confused between home loan and mortgages they think it is one or the same thing. Mortgages is also called Loan against property (LAP). However, you need to understand home loan is taken vastly to buy house, plot, under construction property, etc.

Whereas, mortgage or loan against property is termed as a secured loan that helps borrowers to meet their personal and business requirements by mortgaging their property.

Loan against property or mortgage loan can be used for various purposes, such as expansion of business, marriage in family, funds for medical treatment, leisure vacations and higher studies for children, etc.

The loan is provided as a percentage of the asset’s market value, that usually ranges from 40 per cent to 60 per cent.

Another important thing to know, interest rate for a home loan is lesser than a mortgage loan, a home loan is more affordable than mortgage.

Home loan, on the other hand, is the debt that you incur when you are about to buy a house. The house stands as a security against which you avail of the home loan. The lender creates a lien on the house till the time you clear the debt.

Home Loan Vs. Mortgage Loan Chart Comparison:

 

Home Loan Vs. Mortgage Loan Chart Comparison

 

Above comparison is just an estimate, with the decreasing repo rate by RBI due to covid-19 pandemic, the home loans are much cheaper now as compare to pre-corona time.

It can fall anywhere between 7.50 to  9% , whereas the mortgages have also seen a drop, always check the official website of the lender(bank, nbfc) with the current interest rates as its keep on changing.

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What Is Property Tax?

In India, Property Tax is impose by the municipal authorities on real estate. It is based on the value of the property.

The rate of property tax and manner of valuation varies from one municipal authority to the other.

Property Tax, is also referred as House Tax. This tax is imposed on real estate owners by the municipal authorities like panchayat, municipality or municipal corporation.

Property Tax is used for maintenance and ass as a contribution to the local civic amenities of the area, like roads, sewage system, lighting, parks, and other infrastructure facilities.

It is generally charged on all real estate, including buildings (residential or commercial), attached land, and improvements made to the land. However, property tax is not on vacant plots of land with no adjoining building.

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How To Pay Property Tax?

Property tax are to be paid by the owner not by the occupant of the property moreover property tax is charged annually. It can be paid at the local municipal corporation (MC) office of your area, or sometimes at the designated banks in affiliation with the Municipal Corporation.

You may need to provide the property tax number or Khatha Number to identify your property.

How to Pay Property Tax Online?

With the surge in the online portals for most services now any owner can pay the property tax online by visiting the website of his municipality/city corporation.

Any individuals can choose the mode of payment, as credit/debit cards or internet banking. You can search for your MC on google and go to the website to check if they provide this service or not, else can go to the office directly to pay.

Once payment is made individuals can take a print out of the challan for their reference.

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How to Calculate Property Tax?

The formula used for calculating property tax is given below:

Property tax = base value × built-up area × Age factor × type of building × category of use × floor factor.

You do not need to do this by yourself, instead it will be done by the local corporation, you just need to be aware.

Property tax is determined by your local administration – that is, urban local bodies such as Municipal Corporation and similar organizations.

What Is Mortgage Insurance?

Mortgage Insurance guarantees repayment of a mortgage loan in the unfortunate event of the policy holder’s accidental  death or disability.

Generally, the tenure of payment of such mortgage insurance is 12 months (it may be higher). Moreover, the lender can protect his/ her loaned capital through the special type of insurance instrument.

There are two types of mortgage insurance:

Private Mortgage Insurance(PMI) and Mortgage Insurance Premium(MIP)

Private Mortgage Insurance(PMI) is offered by private insurance companies, it protect the borrower from the lender in case there is a default. PMI cover a large portion of the capital borrowed.

Mortgage Insurance Premium(MIP) is a government insurance products that protects the lender in case the borrower does not pay the amount because of some unfortunate event.

 

 

Why Mortgage Insurance Is Required?

With mortgage insurance theirs is a safety for the lenders as well as borrowers moreover you can get the loan with less than 20% of down payment of total loan.

List of Private and Government Mortgage Insurance Companies:

  • LIC Housing Finance
  • UCO Bank
  • Allahabad Bank
  • United Bank of India

Private Banks:

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Bottom Line:

I hope home loan calculator with other important features would have helped you and saved your time.

If you ask me personally, I would advise anyone, any-day not to go for any loan until it is very critical for you.

Instead, save money or invest in other financial assets (like gold, fixed deposits, SIP, mutual funds, stocks indexes as long as you can.

Buy anything when you have that amount in your hand instead of taking any loan.

Reason being the interest rates you pay is huge, longer the tenure, if you have invested the same capital in any other financial assets, that you pay for EMI’s every month at the end of the loan period your money would be the same that you have paid interest to the bank.

Let me explain this through an example suppose you want to buy a home and you require ₹10,000,00,for the same, you estimated that you can pay this loan within 5 years (60 months), let say the bank is giving you the loan at 9%(excluding any other charges like processing fee etc.).

Using the above home loan calculator  your monthly EMI will be ₹20,758.34, which means at the end of the loan the total payable amount would be ₹12,45,500.40, this simply means you paid an interest of ₹2,45,500.40.

Now, if you have invested the same money in equity or and other index funds for 5 years, or through monthly SIP possibility of  the return of 9% is very nominal in stock market.

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Having said that there is no guarantee as such, I just wanted to present you the another point of view, its your hard earned money, so do proper research before taking any decision.

Moreover, in India home is something very special, everyone wants to have his/her home, that is also the reason the present government of India has launched great initiative of providing the subsidy towards these home loans under PradhanMantri Awasiya Yojna.

Which makes the home loan affordable to all classes. You can check the scheme by going to the website of PMAY.

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Do you know the concept of present value of your future money, if not then you should.

Just like 100 rupees in your pocket today will not have value of 100 rupees after 5 years, similarly 100 rupees you receive in future, invested today won’t have the same value. ?Confused??

Check moneycontain present value calculator and ultimate guide on NPV here.

If you have to analyze, what would be the value of money that you have today sometime in the future, then you need to move the ‘money today’ through the future i.e. future value of that money.

This is a much read from my end to better understand the flow of money.

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If, you have liked the content please do share it with your friends or on social media, as sharing do bring the good karma. If you have any questions or feedback you can leave them in comment box below.

Note: Above information is just for reference, to make you understand more about home loan and mortgages and its importance, under no circumstances intended to be used or considered as financial or investment advice, a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset. Please do your own research and buy any loan or asset.

Moneycontain will not be responsible for any of your losses at all. The point made is for educational purpose only. Please do not take this as any recommendation, to trade or invest. All investments are subject to risks, which should be considered prior to making any investments

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