Buying a home is perhaps everyone’s dream and is also considered the most important financial objective. The sense of accomplishment and peace that comes with owning a home are priceless. Regardless of whether you buy or build a home, you will be making a major financial investment.
To encourage people to pursue their dream of owning a home, several sections in the Income Tax Act 1961 allow for a tax deduction for various components of the purchase or construction of a house, primarily if a home loan is taken. If you are planning to buy a house soon, here is a quick guide on the available tax benefits.
As a home loan borrower, you can claim tax exemption on principal repayment every year under Section 80C, interest payments under Section 24 (b), and an additional benefit on interest under Section 80EE if you are a first-time homebuyer.
How to use Home Loan EMI Calculator
SuGanta.com Home loan calculator is very easy to use. Any individual who is looking to get a home loan or has already taken a loan can use it to check their EMIs. Take the following steps to check EMIs using this calculator:
Step 1: Enter the amount you want to borrow
Step 2: Enter the tenure (in years) for which you want to borrow
Step 3: Enter the rate of interest
Step 4: Click on “Calculate Your EMI”
After you take all these steps, you will be able to view your monthly instalment on your home loan.
How the Home Loan Calculator Helps You
Using the EMI calculator to know your EMIs in advance can be helpful in many ways. Check out some of the reasons why you should use it:
How much should you borrow? The calculator can help you decide the home loan amount, based on how much EMI you can afford to pay from your income. In other words, you can plan your finances better.
How long should the tenure be? Knowing the EMI you can afford to pay every month, you can determine the right tenure for your loan.
How much down payment should you make? Using the home loan EMI calculator, you can figure out how much you should pay as the down payment, in order to save maximum on your interest while keeping
your EMIs to minimum.
Factors Affecting Home Loan EMI
There are multiple factors that can affect your home loan EMI. Check out some of the key factors below:
Loan amount: The loan amount your borrow affects your EMI. Higher the amount you borrow, the higher your EMI.
Loan tenure: The tenure for which you take a home loan also affects your instalments. If the tenure is longer, your EMI will be lower. Remember, longer tenure also means you pay more interest over
the period as compared to a shorter tenure loan.
Interest rate: In case of floating interest rate loans, your EMI will change in line with the fluctuations in interest rates. If the rate goes up, your EMI also goes up.
An Illustration to understand how your EMI changes with these factors:
The table below shows estimated EMI based on different loan amounts and tenures.
| Estimated EMI* (assuming rate of interest at 7% p.a.)
|
| Tenure
|
Loan amount
Rs 30 Lakhs
|
Loan amount
Rs 60 Lakhs
|
Loan amount
Rs 1 Crore
|
| 5 years
|
Rs 59,403
|
Rs 1,18,806
|
Rs 1,98,011
|
| 10 years
|
Rs 34,832
|
Rs 69,665
|
Rs 1,16,108
|
| 20 years
|
Rs 23,259
|
Rs 46,518
|
Rs 77,530
|
| 30 years
|
Rs 19,959
|
Rs 39,918
|
Rs 66,530
|
How to Reduce Your Home Loan EMI
If you are looking to get a new home loan or if you already have one, here are some tips to help you reduce your home loan EMI:
Check with multiple lenders before finalizing your loan. Choose the one that offers you the best deal.
Don’t borrow more than you can afford. If you can’t afford to repay on time, don’t borrow.
Make a higher down payment. Lower the amount you borrow, lower the EMI.
Choose a longer tenure (but this also means you will be paying more interest over the period).
Make a prepayment on your loan, if and when possible.
Apply for a balance transfer home loan to get a better deal.