Are you confident enough to invest in a permanent residence? It is one of the biggest decisions of a person’s life because of the huge budget and a long-term settlement decision. Personal residential property gives you the satisfaction of security and safety. Moreover, the value of real estate will continuously rise so you don’t have to worry about any loss in the future.
The real question is, how to become an owner of residential property without facing the issue of heavy debt. The land property and construction costs are increasing rapidly and most of us are not financially stable enough to buy a dream home with a one-time investment. A loan is the most popular and feasible option of current times to buy residential property but how to know the right amount suitable according to your expectations and affordable budget? Here comes the role of a home loan calculator. Let’s have a close look at this calculation mechanism of home loans.
Understanding home loan calculator and its working
First of all, you need to understand that every financial institution has a different interest rate so the EMI figures will also differ accordingly. A calculator of home loans EMI is programmed in a manner that anyone can use without requiring any prior experience. You just need to find an online portal of unbiased banking products comparison. Their calculators require some basic information about your financial condition such as:-
- Annual household income
- Monthly expenses
- Percentage of down payment
- Percentage of interest rate
- Total loan duration
- Annual property tax percentage according to your state policies
- Annual home insurance cost
- Monthly homeowners association fee
Once you fill all these fields of a home loan affordability calculator, it will automatically process the data to provide crucial data including:-
- Payable principal
- Interest amount
- Property tax
- Insurance cost
Now you can easily calculate the total payable amount for a certain period of time on the basis of interest rate. Scroll down to know some significant advantages of using a home loan calculator.
Some significant reasons for using a home loan calculator
- Misleading information prevention
You are a big fish for real estate agents and financial institutions because buying a house is a huge investment. Therefore, the risk of fraud also remains higher. Some financers advertise luring EMI plans and interest rates to mislead and attract people. Instead of relying on their attractive plans blindly, you can get the real cost with the help of these unbiased calculators. Just ask them to provide an interest rate percentage for a certain period of time on the desired amount of loan.
- Fast results with high accuracy
These are the digital calculators working with the help of a computer program. You don’t have to wait for getting information such as the total interest rate and principal amount. The calculator will reflect the results at lightning speed right after you enter the appropriate numeric figures. Also, here is no risk of wrong information because these digital calculators are highly accurate.
- Helpful in future planning
Buying a house on loan is a long-term investment. Usually, it takes 20-30 years to pay the EMI so you need to plan everything systematically. The current annual household income and future increments are helpful in making feasible finance plans that don’t affect other goals of life. The calculator provides an accurate amount of monthly, annual and total EMI that helps adjusting the budget systematically.
- Convenient for offers comparison
Every financial institution offers different interest rates for different durations of time. According to your budget, figuring out the most feasible plan is a big challenge without a home loan calculator. The calculator can process the data of every loan offer currently available in the market. You can enter the interest percentage of every available financing source, compare the final amount and then decide the most feasible option.
It is advisable to request a meeting with the agent of financial institutions to clarify all the hidden charges, terms and conditions. Use the calculators of an unbiased comparison website or app. Even a slight difference in the interest rate can make a huge difference in the total payable amount. Therefore, never forget to use a home loan affordability calculator before making an investment.