## Here’s why the Home loan EMI calculator is such a helpful tool.

The amount of money you borrow from the financial institution to invest in some immovable property is termed as home loan. Banks and NBFCs lend money to the borrower at a fixed or an adjustable/floating rate of interest.The home loan is given for the properties like; the already constructed property, flats, under construction property, buildings that are to be constructed over pre-owned properties and renovation of existing property. The amount one can avail depends on the job stability of the borrower, the CIBIL score,the location of the investing property, the listed builders, and the status of the co-borrower. The loan eligibility increases with addition of the earning family member like the spouse, father, mother brother or any earning co-applicant as the guarantor.Due to low rate of interest charged by the banks and NBFCs in comparison to other loans, like the personal loans and education loan, the borrowers make a mistake of applying for a large amount. When the burden of EMI falls then they realize their mistake. To save the borrowers from committing this mistake, lending organizations have come up with the home loan EMI Calculator.

Manually calculating the EMIs with reducing principal amount over the passing yearof the loan term tends to be problematic task. It ends up in a financial mess. Home loan EMI Calculator from different lending organizations is a solution to this problem. The principal amount on which one takes the loan reduces with the payment of EMIs every year. So, the rate of interest also reduces leading to a savings of 0.5-1.0% approximately.

After taking the home loan, the crucial part of the procedure is repayment of the EMIs. So beforehand planning can help the borrower to plan the savings procedure accordingly and complete the process hassle-free. A clear knowledge of the amount to be repaid towards EMI can help to take an informed decision. We should calculate the EMI with the home loan EMI Calculator because, it helps determining the loan amount, it assist in checking the interest percentage, the tenure of the loan can also be determined, it checks the affordability. With the help of the calculator we can compare and select the best lending institution that can offer additional benefit. The decision of taking the fixed or floating rate of interest becomes wiser. Once the EMI amount is decided the selection of the loan will be easier and faster.

It is always commendable to be ready for the wintry days, when the market rate fluctuates, any accidental situation knocks. The accurate calculation which results to a handsome saving can help us to overcome the situation without being enlisted as a defaulter. The home loan EMI Calculator is a boon for the borrowers in the age of recession.

A fair understanding of the ratio of principal amount to the interest due, based on the effect of the home loan tenure and interest rates is provided to the borrower with the use of the calculator.

The calculator will give an approximate figure for the total installment along with complete break-up of the home loan repayment process. The borrower can use it to gain access to an amortization table to strategize the repayment schedule. With EMI calculator a proper calculation of the amount is done before hand, and the repayment can be adjusted accordingly by the borrower.

## Tax Benefits on Home Loan in India

A very important criterion to be kept in mind while taking a home loan is the Tax Benefit on Home Loan. In the union budget announced on 1st Feb 2017, the Finance Minister has made significant changes with respect to tax benefit on home loan.

So, here we will discuss about these changes and further tax benefits on home loan.

Some points we will discuss here—

• Tax benefit on home loan for under construction property before possession
• Tax benefit on home loan for individual applicant
• Tax benefit on home loan for co-applicant, co-borrower and joint owner
• Tax benefit on home loan for second home

Tax benefit on home loan for under construction property before possession

Booking an apartment which is under constructed is sometimes cheaper.

If you have taken a home loan for purchasing under construction property, you can claim tax deduction on the interest paid during the construction year after construction is completed and property possession is given to you but there is no tax deduction on principal repaid during the construction period.

According to Section 24 of IT Act, you can claim deduction against the interest amount that you have paid on your housing property during the pre-construction period.

Tax benefit on home loan for individual applicant

EMI is typically divided into principal and Property Loan Emi Calculator.

Principal is allowed as deduction from your gross total income (subject to an overall cap of 1.5 lakh with other eligible investments).Interest payable on self-occupied property is subject to a maximum deduction of 2 lakh under the head ‘income from house property’.

It can be set off against other income, in the same year. This reduces your tax liability. But to claim this, it is essential that the acquisition or construction is completed within 5 years from the end of the financial year in which the loan was taken; else the deduction will be limited to 30,000.

[Source: testblog.in/regroblog/2017/02/08/tax-benefits-on-home-loan-in-india]

## Simple Yet Effective Ways to Improve Your Credit Score

Overview:

One can improve one’s credit score either in a systematic way or by doing simple day-to-day activities. However, for attaining a good score one need follow any hi-tech formula. Simple ways will help you get a good score.

Keep a track of the following points

• Make it a habit to at least annually review your credit report. This will help you track any errors and dispute them on time so that you do not face any problem in the future. It is estimated that at least 25% of the people have errors in their credit report. A timely check on the same will be helpful.
• A hi-tech way of doing so is to apply for an annual report and get it checked from an expert in order to avoid problems.
• Ensure that you make payments on time. This is because payments contribute to 35% of your credit score. In order to maintain a good score, one needs to be extremely particular about clearing dues on time.
• One of the technically advanced ways of doing so is to make use of apps and online tools that will give you prior reminders about all your payments that are due.
• If you are not that technically sound, then set normal reminders on your phone and make payments accordingly.
• Another option is having a desktop calendar which has all the payment days Emi Calculator
•  Marked on the same. This is also a good way to keep a track of your payment days.
• The simplest way to keep track of your payments is by following your email. Ensure that you make the payment on the same day when a reminder email arrives. This will help you make payments on time.
• Do not close old credit cards. Use them for small purchases at least once a month. This will help you maintain a good payment record.

[Source: creditseva.com/blog/work-towards-better-score-simple-yet-effective-ways/]

## Focus on credit factors and not on your credit score

If you are a financially conscientious individual, you may already know that your credit score is an important three digit numeric expression that is looked upon as a barometer of your financial health. But even those who know all about credit scores and credit reports tend to focus only the three-digit number that is their CIBIL score. It is important to make a constant effort to improve CIBIL score, as it will improve your chances of getting timely credit at competitive rates. But what is most important to have a complete and thorough understanding of the factors that influence your credit score. Here is a summary and respective weightage of the factors that constitute your CIBIL score:

Payment track record- 35%

Any article that you have read about how to increase CIBIL score may have always begun with the need to make timely payments on whatever line of credit you have availed of. This is simply because your payment history is the most important factor that influences your CIBIL score. If you are habitually late in making payments for a considerable stretch at the time of servicing credit, it will have a negative impact on your CIBIL score. Therefore, the first and the foremost rule that you must keep in mind while availing of any type of credit is that it is mandatory to make payments on or before the stipulated date. This is half the job done and will help you increase credit score in the long run.

Credit utilization- 30%

People often wonder why their credit scores don’t improve even though they are making timely repayments. This is probably because of credit utilization- another important but neglected factor that influences the credit score of an individual. Simply put, credit utilization is the amount of credit you are using as against your total available credit. Ideally your credit utilization should not exceed 30%. A lower utilization rate over a time leads to a better credit history and thus an improvement in your CIBIL score. A good way to keep utilization rate low is to keep your credit card debt under check.

Amount and timing of new credit- 10%

Each time you make an application for a new line of credit through Emi Calculator, the prospective lender puts in a request with CIBIL to get permission to access your CIBIL report and CIBIL score. A request of this nature is called a hard inquiry. Each time there is a hard inquiry on your CIBIL report, your score comes down by a little. Too many hard inquiries over a short period prove to be detrimental to your credit health. On the one hand, it brings down your credit score and on the other projects you as being “credit-hungry”. A lender is usually wary of lending to those who come across as credit hungry individuals as it increases their risk factor. To avoid coming across as credit hungry, you must try to space out credit adequately. For instance, if you are planning to take a big loan such as a home loan in a year, do not avail of any other new line of credit at least six months prior to it.

Mix of credit-10%

In the modern world credit is available easily. On any given day, you perhaps receive a dozen calls to avail of a personal loan or a credit card. In a moment of weakness, when funds are running low, you may even be tempted to avail of fresh line of unsecured credit. But in the long run, it turns out to be a debt trap that you find difficult to get out of. The first rule of credit is therefore to avail of it only when there is dire need for the same. Unsecured credit such as easy personal loans or an online credit card may seem convenient, but too much of unsecured credit does not augur well for your credit health.  To keep your credit score high, you should have a good mix of secured and unsecured credit, as the mix of credit is another factor that influences your CIBIL score. Ideally a home loan with a credit card or two or a car loan with a credit card and a personal loan are considered a good credit mix.

## Why Should You Use EMI Calculator Before Applying For A Loan?

Loans are an integral part of our lives today. They help achieve some important financial goals which would otherwise not be possible. Be it funding your child’s future education or arranging money for marriage, paying for your dream home or that much wanted car. Whatever the need be, there is a loan for every purpose. There are important terminologies associated with every loan. “EMI” is one such common term.

Loans are repaid in Equated Monthly Instalments (EMIs). Every month a stipulated amount is deducted from your monthly salary towards repayment of your debts. EMIs can either be paid through auto-debit instructions set up on salary accounts or the borrower can send cheques every month. In either scenario, the amount to be paid back is the same, month on month, for the entire tenure. This amount is officially referred to as EMI.

How EMI is calculated?

Primarily there are three factors that are taken into account when computing an EMI. They are:

1. Amount of Loan – This the total amount of money borrowed. In some cases, the loan may be sanctioned for a larger limit however; only a part of it is used so the EMI is calculated not on the sanction limit but on the amount of money actually borrowed.
2. Interest Rate – This is the rate of interest that will be charged by the lending institution on the sum lent. The interest is calculated on reducing balance.
3. Loan Tenure – This refers to the entire period for which the loan has been granted. The tenure in months is used for calculation purposes. Alternatively, this can also be called the number of instalments due.

EMI is calculated as below:

EMI = P * r * (1+r) n/ (1+r) (n-1)

Where,

P = Principal or Amount borrowed

r = rate of interest per annum

n = number of instalments.

Thankfully in this age of technology you do not have to indulge in manual calculations. You can make use of online loan EMI Calculator to instantly arrive at a possible EMI. Given the calculation above, it is aptly clear that EMIs are directly proportional to interest rate and principal amount, while it is inversely proportional to the loan tenure. In simple words, higher the amount borrowed or higher the rate of interest, the EMI will be higher too. However, longer the tenure, smaller will be the EMI.

For example:

For a personal loan of 1, 00,000 at the rate of 12% for 12 months, the EMI would be = 8884/-. For a personal loan of same amount for the same tenure but at rate of 15%, the EMI would be = 9025/-. For a personal loan of 2, 00,000 at the rate of 12% for 12 months would yield an EMI of 17,769/-. Whereas, for a loan of 1, 00,000 at the rate of 12% for 36 months would spell into an EMI of 3321/-.

Thus you can see how your EMI changes with a change in any of the three primary factors.

Why Calculating EMI is so important?

A lot of people are extremely enthusiastic about getting financed. While they plan extensively on what to do with the funds received, they often go underprepared from the debt-repayment perspective. Knowing what your EMI would be before you have applied for a loan would enable you to budget your monthly expenses accordingly.

People who have calculated their EMIs are prepared for what they are getting into, plan for how their lives will be impacted post the EMI and deal better with the burden of debt-repayments than those who don’t plan enough. Goes without saying, the difference of better planning often shows in better credit scores.

Comparing EMIs on loan offers by different lenders guides borrowers to better deals.

EMIs are calculated in such a fashion that with every installment, a part of the principal and a part of the interest is repaid. Interestingly, and contrary to popular customer belief, during the initial phase of the loan tenure, a larger portion of the EMI is allocated towards repayment of interest. Practically after half the tenure has passed, a larger fraction of the EMI is accounted towards principal.

More of this can be made clear through an Amortization Schedule. This is an important table that shows the break-up of your EMI into interest and principal components, month on month. You can either request for an amortization schedule from the bank you apply to or you can calculate the same using online loan interest calculator. This is another important document you must go through before signing any documents.

Why does the EMI change over the tenure?

Incase during the loan tenure, there is a change in any of the three variables that go into the calculation of the EMI, then the EMI might change. Some of the common reasons are:

1. Borrower prepays the loan – this means the principal amount will fall and therefore the interest calculated on the balance amount will change too. This will bring the EMI down.
2. Interest rate change – If your loan is based on flexible rate of interest then the EMI will be adjusted to account for the change in interest rate.
3. Borrower requests for restructuring of loan and an increase in loan tenure. This is will mean a lower EMI.

Summing-Up

Since computation of EMI is made easy with the help of online EMI Calculator, every person hoping to take an advance must make use of it. It helps in calculating your affordability by helping you understand on what will your left over disposable income ultimately. This in turn helps you to avoid poor credit.

EMI varies with loan tenure and interest rate. Amortization schedule helps the borrower see how much outstanding balance is left. It is especially helpful when the loaned wants to foreclose or prepay the loan. The bottom line of any loan is the EMI. Knowing the EMI keeps the borrower from hitting the bottom.