Know everything about a home loan calculator

A home loan calculator is a smart tool that helps borrowers to evaluate their repayment obligations. Based on the results, individuals can further decide on a suitable tenor.

The home loan segment in India has seen a 26% growth in the first quarter of 2021. Many lending institutions levy an affordable interest rate and extend digital features to keep up with this demand.

Digital tools like a home loan EMI calculator is a part of this service. Potential borrowers can use the tool to understand the EMI breakdown.

How to use a home loan calculator?

Individuals should know that a home loan calculator comes pre-installed with lender specific terms. A user can tweak the data as per requirement by entering the data or moving the slider.  Here’s how to use this tool with ease.

  • Visit a preferred lending institution online and find the home loan calculator from the service tab
  • Enter a desired loan amount or pull the slider to set an amount
  • Select a compatible tenor and interest rate
  • The result will be displayed underneath.

Individuals can compute their EMI, total interest payable and total payable, which includes principal and interest. Apart from EMI, one can also find the monthly repayment schedule for a respective loan tenor.

This tool uses a simple algorithm that is based on a mathematical formula.

EMI= [P x R x (1+R) ^n] / [(1+R)^ n-1]

Here, P represents the principal loan amount, R stands for current home loan interest rate, and n represents the number of monthly instalments. To understand this concept better, here is a simple example.

An individual avails a home loan of Rs.10 lakh for a tenor of 10 years, where the interest rate levied is 8%. Applying the formula, the EMI amount will be Rs.12,133 and interest payable will be Rs.4,56,000 approximately.

However, manually calculating the EMIs can be time-consuming and lead to inaccuracy. In this regard, using a home loan calculator is a smarter choice. For instance, an individual who wants to reduce the interest payable can lower the tenor in the tool and instantly find the results. They can check the difference and possible savings.

Apart from EMI breakdown, this smart tool also extends multiple benefits. Some of them are discussed below.

What are the benefits of using a home loan calculator?

A home loan calculator can be found on most lending institution’s websites. Some of its benefits include-

  • Time-saving

Potential borrowers can calculate their home loan EMI obligations within seconds. This further removes the hassle of visiting lending institutions.

  • Accurate results

Unlike manual calculation, filled with errors and trials, the EMI calculator gives precise results. This removes the confusion regarding the repayment structure.

  • Compare different lenders

The tool allows potential borrowers to compare different lenders and their terms. This is crucial as the lending market is filled with options. Relying on the features and services won’t make the borrowing successful. Instead, individuals can enter the interest rate levied by a specific lender in the calculator and tweak the tenor to find a compatible repayment structure.

  • Mobile-friendly interface

With the growing number of mobile users, lending institutions have made their applications and digital tools mobile-friendly. As a result, potential borrowers can access the tool at their comfort.

These are some of the effective uses of a home loan calculator. Apart from EMI evaluation, borrowers should also check lender specific home loan eligibility criteria and documentation. This will help in streamlining loan applications.

In this regard, maintaining a good CIBIL score and clearing outstanding dues will improve the chances of housing loan approval. A credible borrower will easily convince a lender to levy an affordable interest rate and gain customised features.

For instance, many reputed HFCs extend pre-approved offers to borrowers with credible repayment history, which make the loan application simple and hassle-free. These offers are applicable on financial products like home loans, LAP, etc. One can check their pre-approved offers by entering a name and contact number.

Hence, a home loan calculator is a smart tool that aids potential borrowers to decide a loan tenor and repayment structure within seconds. It is recommended to use this tool before making a loan application for a lucrative output.


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