How To Use Housing Loan Calculator And Home Loan Top Up To Your Advantage
It is common to consider borrowing before owning a home. But, borrowing with zero financial planning can be more troublesome in the long period. Smart borrowing strategies can help you avoid this situation and make the most of your borrowing options. In this blog, we’ll explore how to use two powerful tools, the housing loan calculator and loan top-up for home, to your advantage.
What is a Housing Loan Calculator?
A housing loan calculator has been used by an individual to calculate monthly payments and total interest on a housing loan. This tool is available online for free and considers three main factors: the principal amount, the interest rate, and the loan tenure. Housing loan calculators aid individuals in keeping their money in check by telling them about their monthly payments, interest to pay on the loan, etc., and help them estimate the amount of time it will take to get the possession certificate for their property.
Why Use a Housing Loan Calculator
A quick brief on what the housing loan calculator has to offer you:
- It helps you determine your borrowing capacity.
- It helps you compare and choose the best loan offers.
- It helps you plan your finances and budget effectively.
- Provides transparency in loan repayment and interest charges
- It helps in saving money with one of the most suitable loan options available.
Steps to Use a Housing Loan Calculator
You just need to follow these simple steps to use the calculator:
- First, enter the principal loan amount you want to borrow, which is the total cost of the property you intend to purchase.
- Now, enter the interest rate (Charged interest on your loan).
- Finally, enter the loan tenure, or the duration in years over which you’ll repay the loan.
After entering the required information, click “Calculate”. The calculator will display your monthly EMI and total interest payable.
What is a Home Loan Top Up?
A home loan top up is a loan that is only offered by financial institutions or banks as a facility to existing home loan borrowers. The benefits of a home loan top up are:
- Offers low-interest rates than credit cards and personal loans
- No collateral or security is required.
- Flexible repayment options
- Quick and hassle-free loan processing
- Tax benefits are claimable on the paid interest.
How to Use a Home Loan Top Up?
Easy steps to learn how to use Home Loan Top Up:
- Ensure that your bank or financial institution offers a home loan top-up facility.
- Cross-check the eligibility criteria and interest rates for the top-up loan.
- Now, you should apply for the top up loan by submitting mandatory documents.
- Upon getting approval, it will be disbursed directly to the bank account.
Top Smart Borrowing Strategies
Now that you know what a housing loan calculator and home loan top up are and how to use them, let’s explore some smart borrowing strategies to help you make the most of these tools.
1. Determine Your Budget With A Housing Loan Calculator
The first smart borrowing strategy is to determine your budget with a housing loan calculator. This tool effectively determines the loan amount you can afford.
- Enter your gross monthly income, expenses, and other obligations into the calculator.
- Determining the loan amount can be afforded by you based on the loan tenure, interest, & other major factors.
- Calculate your monthly repayments based on the loan amount and other terms.
2. Negotiate Interest Rates With Lenders
The second smart borrowing strategy is to negotiate interest rates with lenders. Use your housing loan calculator to estimate the interest rate and total interest payable based on different scenarios.
- Compare the interest rates offered by different lenders.
- You can negotiate the interest rate based on your financial profiling & credit card score.
- Use your housing loan calculator to estimate the interest payable based on different interest rates.
3. Use A Home Loan Top Up For Emergencies
The third smart borrowing strategy is to use a home loan top up for emergencies. The interest rates for home loan top ups are lower than personal loans, making them a cheaper option.
- Use your housing loan calculator to estimate the loan amount you can top up.
- You can apply for a home loan top up if you already have a home loan.
- Use the funds wisely for emergencies only.
4. Make Prepayments To Reduce Interest Costs
The fourth smart borrowing strategy is to make prepayments to reduce interest costs. A prepayment is an extra payment you make towards your loan to reduce the principal amount and the interest payable.
- Use your housing loan calculator to estimate the interest payable based on different prepayment scenarios.
- Make prepayments when you have surplus funds.
- Check with your lender for any prepayment charges or conditions.
5. Opting For Shorter Loan Tenure
In shorter loan tenure, you can pay your loan fast while saving your interest costs. However, your monthly repayments will be higher than if you opt for a longer loan tenure.
- Wisely select a loan tenure that meets your requirements.
- Use your housing loan calculator to compare the interest payable and monthly repayments for different loan tenures.
Before You Go!
Using a housing loan calculator and a home loan top up can help you plan your finances better and save on interest costs. By following these smart borrowing strategies, you can make the most of these tools and achieve your financial goals. Remember to always borrow within your means and use the funds wisely.
