Home mortgage loan calculator
Anybody desirous of purchasing a home these days has little choice but to mortgage the home for a home loan. home loans are given for purchasing the residential property, as well as any repairs and maintenance that may be required in it. Lenders charge lower interest rates on home loans of first time home buyers. However, any subsequent loan availed on mortgage of the same home carries higher interest rates.
Even the term for which home loan is offered varies as per the purpose. Therefore, first time home buyer may be eligible to repay the loan over a longer time frame provided other conditions such as age, credit ratings, etc., are met. Repayment term for any subsequent loans that may have been raised by mortgaging the same residential property is essentially lesser than the initial term of the home loan.
home loans are repayable in equal installments over the entire term of the loan. The repayment method is designed to enable the borrower to repay the home loan without much strain, while letting lender earn interest on the money loan ed. Since loan is higher in the initial stages, and diminishes with every passing year, repayment of loan is lower in the initial stages, as the interest on the loan is higher at this stage. This ratio between interest repaid and principal repaid keeps on varying within an overall ceiling.
Almost all home loans are repaid on monthly basis. The equal installments are, therefore, calculated every month and are known as EMIs (equated monthly installments). This must have been a Herculean task prior to appearance of spreadsheets. But people did calculate EMIs, even before the existence of modern computers.
At times lenders offer additional features in their home loan products.Since many first time home buyers are young people, whose monthly income may not be much in the initial stages, lenders offer a moratorium period, during which, the borrower or the first time home buyer, may pay only the interest as stipulated. After the stipulated moratorium period, the borrower has to repay home loan in EMIs, which may or may not be as long as the normal home loans.
Other lenders offer flexibility in interest rates. Interest rates may be calculated on fixed rates or flexible rates. Therefore, interest rate may be predefined or vary as per an agreed index.
EMIs may be calculated on reducing balance method or without reducing balance method.
Some EMIs on home mortgage loans are calculated with blend of fixed interest rates and floating interest rates. Therefore, such home loans may carry interest at floating rate. However, such interest may be revised only once in 3 years.Alternately, for the initial five years, the interest may be calculated at a fixed rate, and thereafter, the interest may vary as per index.
Since there are many permutations and combinations possible with different options, interest rates, loan terms, etc., a special home mortgage loans calculator is essential. Most of the lenders have a simple home mortgage loan calculator on their websites to assist prospective customer in estimating their monthly outflows through EMIs.
From lenders perspective, such home mortgage loan calculators are helpful in keeping track of how much loan is outstanding on any given day, and what is the rate of interest that such loan carries. Borrower requires information generated through home mortgage loan calculator s to know how much interest he has paid to the lender throughout the year. This amount may be deducted from annual income of the borrower. In some countries, even the principal repaid on home loans obtained by mortgaging residential property, is deductible from income for arriving at taxable income. Therefore, a home mortgage loan calculator is useful tool for the borrower as well. Such tool enables borrower to compare various home loan products offered by different lenders.
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