The repo rate of the Reserve Bank of India (RBI) has seen a cut twice this year. This means the interest rate at which the RBI lends money to other banks has reduced. Consequently, banks are now offering housing loans at as low as 8% (or even lower) housing loan interest rates. Amidst these elusive interest rates, you may be thinking of taking a housing loan and investing in some real estate. However, before doing so, you need to understand the Equated Monthly Instalments (EMIs) that you would have to bear each month. To help you understand this, a home loan eligibility calculator can be used.
What Is a Home Loan Eligibility Calculator?
To know how such a calculator can help speed up your housing loan approval process, it is important to understand what this calculator does and how it works. It is simply an online calculator that helps you calculate the EMIs for a housing loan. You need to enter the housing loan amounts, the housing loan interest rates offered by the lending institution, and the duration for which you want to take the loan.
If you find that the resultant EMI is within your monthly budget, then you will most likely be eligible for the home loan. This calculator uses the standard EMI calculation formula, which makes it very accurate. Using this calculator, you can avoid home loan rejection, speed up your loan approval process, choose the most suitable lender, understand how housing loan interest rates affect your EMIs, and plan for future finances.
Avoid Home Loan Rejection
Using a home loan eligibility calculator can help you avoid frequent rejections. Each loan rejection can trigger a hard inquiry in your credit score, which can temporarily reduce it. To avoid such situations and maintain a good credit score, it is important to use an EMI calculator to check your loan eligibility yourself. If you see that your current monthly income is sufficient to support the EMI amount shown by the calculator, then this is somewhat of a preliminary assurance that your loan application will not be rejected.
Speeds Up Loan Approval Process
You can also speed up your loan approval process by using a home loan eligibility calculator. This calculator shows you the EMI for the amount you would like to borrow. Once you are sure that you will be able to comfortably pay off this amount each month, it can reduce the back-and-forth discussions with the bank executives. Moreover, since you are sure of the loan amount, you can keep the corresponding documents (such as a salary slip or a bank account statement) handy. This can further streamline the loan approval process.
Choose the Most Suitable Lender
Different lending institutions, such as banks and non-banking financial companies (NBFCs), have different housing loan interest rates and eligibility criteria. You can compare many of these options by adjusting the interest rate and loan tenure sliders on the home loan calculator. This can help you arrive at a decision faster about which lender to choose. Simultaneously, you can also review the policies of each lender, helping you choose the most suitable lender based on many parameters.
Understand the Impact of Interest Rates
When you use a home loan eligibility calculator, you can see the difference in EMI amounts based on different interest rates. When the interest rate is higher, your eligibility may be reduced and vice versa. In fact, there are ways you can increase your eligibility for a home loan by choosing a lender that has a lower interest rate. If the interest rate is lower, this means the resultant EMI may be within your monthly budget, making you eligible.
Helps You Plan Future Finances
In case you find yourself ineligible for the housing loan right now, you can plan your finances accordingly for the future. If you wait for a few months for your income to increase and check your eligibility again, you may find that you are now eligible. Besides, a home loan eligibility calculator can help you plan for different future scenarios. This can help you save time when planning financially for buying a house.
Final Thoughts
A housing loan is not just about getting money to buy a house. It is about careful planning, smart decisions, and making sure the loan fits your needs. A home loan eligibility calculator helps you understand how much loan you can get, compare offers, and apply with confidence.