Top Site Net Features | Register | Login

Home Loan EMI Calculator: What to Do and What to Avoid

The Home Loan equated monthly instalment (EMI) calculator is quite easy to use. It is available on the websites of all leading lenders. It gives you an idea of the EMIs you may have to pay based on the loan amount, the interest rate, and the tenor. This helps you apply for a suitable amount as the Home Loan. But then, you should be judicious in its use. Here’s a checklist of the dos and don’ts when you use the Home Loan EMI calculator.

The Do’s

  • Be Realistic

Be optimistic, but also be realistic while keying in the numbers on the EMI calculator. Enter the possible EMI you can pay based on your expenses. The lender will obviously take your other expenses into account before sanctioning the loan. You may have to reduce the loan amount or increase the tenor so that you can pay the EMIs as well as manage other expenses.

  • Use a Co-applicant

You alter the loan amount, the interest rate, and the tenor to fit the EMI into your budget. Yet, nothing works. Don’t worry. If your spouse has an income too, you can apply together for the Home Loan. That may bring down the interest rate and/or push up the approved loan amount. But do make sure that your documentation is in order before you apply for the loan.

  • Check your CIBIL Score

Every lender markets the lowest interest rate it can offer on its Home Loan. But don’t assume that the lender will offer you the same interest rate when you calculate your EMI. First check your CIBIL score and that of your co-applicant(s), if any. A CIBIL score above 750 can increase your chance of getting a Home Loan at a low interest rate. A lender like Bajaj Finserv can offer you a Home Loan of up to Rs. 5 crore at the best interest rate.

The Don’ts

  • Overestimate Income

A self-employed professional or a business person can have a very volatile cash flow. Sometimes, there are plenty of assignments, while there are days with no work. Even for salaried professionals, job security is a rarity these days. Hence, you should avoid overestimating your future income. Take an average value of your past annual income and consider it as your future annual income. This helps you arrive at the EMI that can fit into your budget.

  • Underestimate Tax

Your Home Loan EMI comprises of the interest and the principal components. You can claim a tax deduction on both, but the limit varies. The largest amount you can claim for the principal is Rs. 1.5 lakh. For self-occupied property, the limit for the interest component is Rs. 2 lakh, while there is no limit for property that has been let out. For a joint loan, each applicant can claim the above mentioned amount for tax deduction.

You can also claim an extra tax deduction of Rs. 50,000 for the interest component. But, for that, the property value must not exceed Rs. 50 lakh and the loan amount should be below Rs. 35 lakh.

So, don’t underestimate the tax benefit while calculating the EMI. If you have enough room, you should reduce the tenor and pay a higher EMI. This helps you to close your Home Loan quicker and, at the same time, enjoy tax benefits.

To Sum It Up…

It is better to be safe that be sorry. When you use a Home Loan EMI Calculator, it is better to underestimate the parameters than to overestimate these and regret later.


About This Author


Anamika VermaAnamika Verma
A financial Advisor
Joined: December 18th, 2017
Article Directory /

Arts, Business, Computers, Finance, Games, Health, Home, Internet, News, Other, Reference, Shopping, Society, Sports