When it comes to mortgage loan repayments, Equated Monthly Instalments are regarded as a convenient repayment facility offered by lenders. Under this facility, borrowers can repay the total liability towards a mortgage loan amount via stipulated numbers of monthly payouts. However, it can also increase the risk of defaulting if not opted for in suitable proportion to one’s monthly income. Thus, a detailed analysis of monthly earnings and necessary Open Calculator financial obligations is mandatory before considering the instalment amount.
In such a case, EMI calculation can be useful to assess future expenses towards loan repayment and manage your personal finances efficiently. However, manual EMI calculation may seem challenging to individuals and may not always bring accurate results. Therefore, aspiring applicants can use an online to come up with the most suitable EMI amount as per their repayment capacity. Here are some vital aspects of EMI computation and the utility of an online calculator for simplified instalment estimation.
Impact of loan components on the EMIs
A mortgage loan EMI can be affected by three essential aspects.
- The loan principal
It is the total amount that individuals borrow from a lender against asset mortgage. A change in the principal amount is directly proportionate to the EMI value, meaning an increase in the loan amount also increases the EMIs and vice versa. So, borrowers should be careful when considering the loan amount.
For example, for a loan against property, the sanctioned principal can go up to Rs.3.5 crore. So, borrowers should input the various loan principals to check the EMIs and opt for an amount that keeps the instalments affordable.
- Rate of interest
interests are determined by lending institutions to cover their financial risk. The rate can, however, vary across lenders as per their policies and existing market trends.
So, a systematic exploration and comparison of present options can be beneficial to avail an affordable rate of interest that keeps EMIs within one’s repayment capacity.
- Loan tenor
A loan tenor signifies the entire duration of the availed funds until wholly repaid. This period can differ across lending institutions. Generally, an extended repayment timeline helps to keep the EMIs affordable. However, the overall interest accrual on the loan amount increases. Contrarily, a short tenor means increased EMI burden but early repayment and reduced interest accrual.
A mortgage loan EMI calculator assists borrowers in determining the ideal tenor for their loan against property or any other mortgage finance. Applicants can enter alternative tenors to arrive at different EMI amounts and determine which one suits their repayment capacity the most.