Are you confused about choosing increasing home loan EMIs or thinking about a prepayment plan? If you’re looking to save some of your loan interest, prepayment is the right choice. People choose the loan prepayment option for several reasons. If you don’t know, here you’ll understand how it benefits you and affects your house loan, but first, you should know about the prepayment of home loan and prepayment calculator.
To pay a partial or entire amount of the loan before the customary tenure is known as house loan prepayment. The home loan prepayment calculator helps you determine how much interest you can save. Submit the loan amount, paid installments, interest rate, and tenure and see how much loan amount is left to pay.
How Does the Home Loan Prepayment Calculator Work?
The prepayment calculator specifies how much interest you can save on your loan. You need to add these details in the given sections:
- Tenure
- Loan amount
- Paid instalments
- Rate of interest
- Prepayment amount
Benefits of Loan Prepayment Calculator
Using Home Loan Prepayment Calculator online is beneficial in repayment the amount.
Knowing the other benefits:
- First, it helps in deciding the loan repayment amount.
- Assisting in reducing the EMIs.
- Calculate loan outstanding.
Now that you know how the prepayment calculator works and its benefits, here are some crucial factors you should implement before making a loan prepayment.
Factors to Consider Before Making Home Loan Prepayment
Before making a house loan prepayment, you should know the difference between a house loan prepayment calculator and Housing Loan EMI Calculator. The housing loan EMI calculator enables you to calculate your monthly instalments with ease. The first and essential factor to consider is having an emergency fund.
Keep Emergency Fund
Having an emergency fund is a must before making the loan prepayment because if the sum amount is large, it may use up your entire savings. Furthermore, if any mishappening turns out, your emergency fund can assist you. Hence, make sure you keep your emergency fund separate, and not dip into savings or emergency funds when making house loan prepayments.
Choose Between Loan Tenure or EMI Reduction
Tenure selection is the primary consideration during the home loan. You can choose low EMIs or reduced tenure during house loan prepayment. Both short tenure and reduced EMIs will save you some interest on your home loan..
Borrower’s Age
It is advisable that if you’re below 60 and not retired, you should make a loan prepayment since it might not be a challenging thing to do. But once you are retired, you have a limited income source that will lead to the debt burden. So it’s better to make home loan prepayment when you’re working or have an adequate income flow.
Savings from Prepayment
House loan prepayment is a precise option if you intend to save interest. However, you can ignore home loan prepayment if you don’t have any savings. These savings will act as an emergency fund in times of financial crisis. You can use the housing loan EMI calculator to calculate your monthly EMIs, as it provides accurate results and will be a time saver.
Wrapping Up
The home loan prepayment calculator is an excellent tool if you wish to save your money off the home loan. Using a prepayment calculator is as easy as 1-2-3! All that you need to do is plug in your loan amount, interest rate, and how many months you want to lower your interest rate by. This should give you an estimate of how much money you can save.The prepayment calculator features will help. Hope the above helped you understand prepayment of home loan better. In case you wish to avail a home loan at affordable EMIs, choose a reputed lender like Grihashakti for an easy loan process.
