Multiple banks. Different interest rates. Call it a "conflict of interest".
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    What is a Mortgage Loan?

    In a mortgage loan, the issuing bank extends a loan against any real estate or property pledged by the applicant or customer as security or collateral. Most banks offer various types of mortgage loans based on different factors such as tenure, fixed or floating interest rate and class of borrowers.

    How to use Mortgage Calculator?

    A mortgage calculator helps users calculate their Equated Monthly Instalments (EMI) by using the following data

    • Loan amount
    • Tenure
    • Rate of interest

    Most bank websites have an EMI calculator which displays several illustrative scenarios based on the input details submitted by users. It is important to note that results generated by a user-friendly mortgage calculator cannot be a substitute for professional consultancy, necessary documentation such as certificates and financial statements.

    Features of Mortgage Calculator

    The salient features of mortgage calculators are listed below:

    • Comparative analysis: Mortgage calculators help users get a comparative analysis of various loan schemes offered by different banks in that users can figure out how much money they can save money by switching to a particular bank.

    • Explore options: Users can enter different loan amounts, tenures and rates of interest into the online calculator to assess various payment options in addition to ascertaining the total cost of a mortgage.

    • Repayment scenarios: Users can make use of the repayment mortgage calculator to get results on their repayments schedules upon entering details related to monthly payments, interest rate and tenure.

    • Desired amortization schedule: Users can get detailed results on their in terms of their monthly mortgage payments, interest, principal and principal outstanding.

    • Customised: Each user can enter the required details such as type of interest rate, amortization period and loan amount among others into a mortgage calculator and get the desired results.

    • Handy tool/quick: Mortgage calculators are user-friendly in that they can be used to make quick calculations in less time to get an overview of various mortgage options available in the market without consulting any professionals. It is, therefore, a handy tool.

    • Simplify complex scenarios: In many cases, prospective loan applicants may get overwhelmed by the financial jargon in the policy document or website. Mortgage calculator comes to the rescue of such customers in that it simplifies extensive data and helps users get a clear picture of the variables rather than mere nebulous ideas on paper.

    • Better understanding of products: There is a view that easy-to-use mortgage calculators lead to a better understanding of products and services rather than rich description in a text format. The data is out there for all to see sans complex verbiage.

    • Win-win: Owing to the aforementioned reasons, many industry experts believe that many banks/financial institutions and financial websites will stand to gain by introducing advanced versions of mortgage calculators to not only attract more visitors to their site but also improve customer satisfaction and retention. The users too can make use of the tool to enhance their knowledge of various financial products and make use of them in an efficient manner.

    Amortization Table

    Sandeep Sharma, a 30-year-old IT employee, opts for a Mortgage Loan for a period of 10 years. The details are listed below:

    Loan Amount: Rs.5 lakh

    Tenure: 10 years

    Rate of Interest: 9%

    Sharma entered the above details in a mortgage calculator and got the following results

    EMIs: 120 Months

    Monthly Interest Rate: 0.75%

    Monthly EMI Payment: Rs. 6,334

    Total Loan Amount Payable: Rs. 760,055

    Total Interest Amount Payable: Rs. 260,055

    Below is the amortization table based on the aforementioned details?

    Month EMI Interest Principal Outstanding
    0 - - - Rs.5 lakh
    1 Rs. 6333.78 Rs. 375 Rs. 2583.78 Rs. 497416.21
    10 Rs. 6333.78 Rs. 3570.26 Rs. 2763.51 Rs. 473272.41
    20 Rs. 6333.78 Rs. 3355.86 Rs. 2977.91 Rs. 444471.23
    40 Rs. 6333.78 Rs. 2875.87 Rs. 3457.91 Rs. 379992.11
    60 Rs. 6333.78 Rs. 2318.51 Rs. 4015.27 Rs. 305119.97
    80 Rs. 6333.78 Rs. 1671.31 Rs. 4662.47 Rs. 218179.63
    100 Rs. 6333.78 Rs. 919.79 Rs. 5413.98 Rs. 117225.89
    120 Rs. 6333.78 Rs. 47.14 Rs. 6286.63 Rs. 0.01
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