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How to Use Home Loan Calculator to Make Financial Planning Easy in 2022

by Shahbaz Ali
Home Loan Calculator

People don’t have to budget and have money all their lives to buy their own homes. So many banks, NBFCs, or other financial institutions give home loans to help people buy a house.

With so many finance options available, you can now make your dream home a reality.

However, a home loan is a huge liability and should be considered carefully. Make sure your income can meet your home loan requirements before applying for said loan.

It’s difficult to compare and calculate EMIs against various loan schemes manually. A home loan calculator is a good way to help predict future instalments towards a particular loan.

How to Use Home Loan EMI Calculator

A loan calculator is simple to use and takes only minutes to compute various loan requirements and repayment amounts. The loan calculator also enables you to understand whether the monthly payment would be affordable.

It takes just three steps to use the calculator:

  • Enter the loan amount
  • Interest rate
  • Select your loan tenure in years

The calculator will estimate the EMI amount and even estimate the total loan interest payable for any loan amount. If you change the input values, the calculator will re-compute your result.

The mathematical formula for calculating your loan is:

[P x R x (1+R)^N]/[(1+R)^N-1]

P is the principal loan, R is the rate of interest, and N is the number of monthly instalments or your loan tenure.

Why Should You Use Home Loan Calculator

With a loan calculator, you can evaluate various aspects of your loan at home even before you apply for the home loan. Loan calculators are free to use on most lender websites, and you can compare your loan amount, interest rate, and EMI among various lenders.

Here are some more benefits of using an EMI calculator.

Helps Get Estimated EMIs

The home loan EMI calculator can help you understand your EMI before taking the loan. This way, you can plan your monthly budget or consider alternate loans if the payment is beyond your budget.

Knowing your EMI in advance also helps you skip future problems regarding loan repayment. If you don’t know your EMI amount beforehand, it might skew your monthly budget if the instalments are more than what you can afford.

Compare Lenders

The home loan calculator can help you compare different loan schemes. If you have shortlisted four schemes, you can use the EMI calculator to choose the loan that gives you the best deal.

Say the first lender has a loan of Rs. 40,00,000 for 10 years at 13% rate of interest, while the second lender is giving Rs.40,00,000 for 12 years at a 10% rate of interest. You can use the EMI calculator to get the EMI for each lender, which is Rs. 37,666 for the first lender and Rs. 30,555 for the second lender.

The interest for the first lender is lesser than for the second one, but the EMI is lower for the second lender. Based on the EMI and total borrowing cost, you can decide on your lender.

Pick Your Loan Amount

Your loan amount should be what you can afford to repay comfortably. If you try to get a loan that is too high based on your income bracket, you might end up spending most of your income on loan repayment and not have enough left over for other necessities.

Upon calculating the EMI, you can reduce the loan according to your budget if you can’t afford to repay a particular amount.

Helps Choose the Right Tenure

You can use the home loan EMI calculator to decide the tenure of your loan.

Your EMIs will be based on this tenure. A long tenure means lower EMI payments, while a lesser tenure can increase your monthly instalments. You can adjust the loan tenure based on your requirement, so the EMIs are more affordable.

For example, if your calculations show that a loan of Rs. 40,00,000 is too much for your budget. You can reduce the principal and recalculate accordingly.


With multiple online tools and options, you can evaluate your home loan options to choose the loan that best suits your needs. You can compare the loan amount against your repayment capacity to better understand your future liabilities and make an informed decision.

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