Given the sky high prices of real estate in the country, a home loan has become a viable financing option for many. Whether you plan to buy a new home or renovate an existing one, understanding your finances and mapping them with your repayment strategy is crucial. One of the most common and feasible home loan ranges falls in the 20 Lakh bracket. So, let’s discuss how a 20 lakh home loan EMI fits into your monthly budget.
Understanding 20 Lakh Home Loan EMI
Before planning for a loan, it is important to comprehend what the 20 lakh home loan EMI involves. EMI or Equated Monthly Installments refer to the fixed amount paid by the borrower to the lender at a specified date each month. The EMI is used to pay off both the principal and the interest accrued on the loan over a set term.
The EMI for a 20 lakh home loan would fluctuate based on different factors like the interest rates, loan tenure, and your credit score. An essential tool to help in understanding your EMI structure is home loan calculation.
The Role of Home Loan Calculation
Home loan calculation is an integral part of loan planning. There are several online EMI calculators available that compute the amount of EMI to be paid based on inputs like loan amount, interest rate, and loan tenure. This helps in gaining a clearer picture of the amount that needs to be set aside each month for loan repayment.
For instance, if you opt for a 20 lakh home loan at an interest rate of 7.5% for a tenure of 20 years, your EMI will be approximately around Rs. 16,119. This figures encapsulate both the principal amount and the interest.
How the 20 Lakh Home Loan EMI Fits Your Budget?
Now that we’ve understood what the 20 lakh home loan EMI implies, and the importance of home loan calculation, let’s understand how the EMI fits into your budget. The ideal scenario is that your 20 lakh home loan EMI should not be more than 40% of your income. This ensures you have enough resources for other financial commitments while comfortably paying off your loan.
When your EMI fits comfortably within your budget, it assures financial institutions about your repayment capabilities, thus enhancing your credit score. Conversely, if the EMI exceeds what you can comfortably pay, it could result in a financial strain, negatively impacting your credit score.
Conclusion
Taking a home loan is a huge financial commitment that needs careful planning and strategizing. The 20 lakh home loan EMI, backed by an accurate home loan calculation, can help you understand your repayment strategy better and guide you to manage your finances effectively.
However, it’s always advisable to maintain a healthy balance between your income and EMI commitment. By ensuring that your home loan EMI does not consume a large part of your income, you can lead a stress-free life while inching closer to owning your dream home. Remember, a well-planned home loan is a step closer to realizing your home owning dream.
