In a person’s life, purchasing a home is not only a major milestone but also one of the significant financial decisions. A home loan eligibility calculator helps in calculating how much loan a person can avail based on their income and financial profile. As the prices of property are on the rise, it is important to plan your finances in advance. This article explains the benefits of using a home loan calculator.
Benefits of Using a Home Loan Eligibility Calculator
Here are the main benefits of using a home loan calculator while purchasing a home.
Help in Financial Planning
One of the primary benefits of using a home loan calculator is it helps you to understand how much loan a person can afford depending on their monthly budget. In the calculator, you just need to input basic information like income, current EMIs (if any), and expenses. The calculator then provides you with a realistic loan estimation. This helps in selecting a property that is suitable based on your financial capacity.
Saves Time and Effort
This calculator saves time and effort as it removes manual calculations. With the help of a home loan calculator, you don’t need to visit banks or lenders to know how much loan you may get. This not only saves time but also allows you to focus on more suitable loan options.
Comparison of Loan Offers
The interest rates and loan terms can be different among lenders. A home loan eligibility calculator can be used to explore the many loan options that are available in the market. You can change loan terms and interest rates within a calculator to see how they affect your eligibility. You can also select the loan offer that is suitable for your needs by comparing several loan offers.
Avoids Over-Borrowing
In the process of buying a home, sometimes people end up borrowing more than they can handle. This may lead to financial stress later on. With the help of the calculator, people will get to know how much they can pay comfortably. This helps in ensuring you borrow the amount which you can pay later.
Pre-Approval Made Easy
In the market, there are some lenders who offer pre-approval for a home loan based on the person’s qualification. A home loan calculator helps to determine the probability of being pre-approved for a loan. Pre-approval can be helpful since it speeds up the home-buying process and indicates to sellers that you are a serious buyer. Having pre-approval can also give you a competitive advantage in a crowded real estate market.
Improved Buyer Advantage
Once you gain knowledge about your eligibility, you can enter the home-buying process with more clarity and confidence. All the sellers and real estate agents will take you more seriously. This can help in the process of negotiating, as it helps you secure better terms or even get deals faster. With the help of a home loan calculator, you can position yourself as a prepared and credible buyer.
Avoids Rejection
One of the common reasons why an application gets rejected is because a loan amount exceeds your loan eligibility. By using the calculator, you can avoid this mistake. The calculator will provide you with a clear and real estimate of your loan amount. This way you can apply for a loan within the limits, and it also improves your chances of getting approved. It also helps protect your credit score from unnecessary impact.
Types of Home Loan
Before you apply, it is important to understand the types of home loans available. There are three main types of home loans available:
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Floating Rate Home Loan: A floating rate home loan can be different based on the lender’s benchmark rate. Depending on the benchmark rate, your loan interest adjusts accordingly.
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Fixed Rate Home Loan: In a fixed-rate home loan, the interest rate remains fixed for the entire duration of the loan. It offers predictability in EMIs, regardless of market fluctuations.
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Mixed Rate Home Loan: It is a combination of loans that offer a mixed interest rate for a specific period, after which the rates switch to floating. It gives you the advantage of both rate structures in one loan.
Conclusion
In the home–buying process, a home loan eligibility calculator plays an important role. The calculator comes with many benefits, like providing a clear estimation of how much loan you can avail based on your income, existing liabilities, and financial profile. The calculator also builds confidence during the negotiation process, and it simplifies the possibility of getting approved. Before applying, it is also important to understand the types of home loans available.
