Loans against property, often referred to as property loans or mortgage loans, are loans that borrowers avail of against the equity locked in a property they own. In simpler words, anyone who owns a property, residential or commercial or even land, can pledge this property as security and avail of a loan against it. Lenders sanction up to 80% of the pledged property’s fair market value as a loan.
The LTV ratio normally goes down in the case of high-value properties. Low mortgage loan interest rates, high loan sanctions, long repayment tenor and property loan tax benefits make these loans quite popular. Therefore, elaborate financial planning becomes extremely important when one decides to avail of these loans.
A loan against property EMI calculator is an online tool that lets loan borrowers calculate the LAP loan EMIs they will need to pay each month to clear their loan within the agreed time frame. LAP EMI calculators are fairly easily available and they are also quite easy to use. To calculate your mortgage loan EMIs using this online tool, simply follow these steps:
- Enter the loan amount that you wish to borrow. While deciding your final loan amount, keep in mind that opting for a higher LTV ratio or a high loan amount will come in the way of you securing a low property loan interest rate. Further, a high-value loan is also always difficult to repay.
- During the next step, enter your desired loan tenor. Opting for a long repayment period will help you pay your loan comfortably through affordable EMIs. It may even allow you to borrow a higher loan amount. However, know that long repayment tenor increases the total interest payout and cost of borrowing funds.
- Lastly, enter the mortgage loan interest rate you are being offered. Having a strong credit profile will help you secure a low rate of interest and what will also help is doing proper research, reaching out to different lenders and negotiating hard with them for the best you can get.
After you input these details into the mortgage loan calculator and click on calculate, the calculator will display results within a fraction of a second. The result delivered by the calculator will include the EMI you will need to pay and the total interest that you will have paid to your lender by the end of the loan tenor.
If you find the loan EMIs unaffordable or believe that the interest payout is too high, you can consider reducing your home loan amount or increasing your home loan tenor. Borrowers must also always use the home mortgage loan eligibility calculator to compute the loan amount they are eligible for. One must never apply for a loan amount higher than one qualifies for. Committing this mistake can lead to loan rejection.
The mortgage loan calculator also gives borrowers their amortization schedule. The amortization schedule is a breakup of all of one’s loan EMIs and how they are divided to cover the principal and interest components of the loan. The amortization schedule also tells loan borrowers how much interest they have already repaid and what remains to be repaid at the end of each month.
The amortization schedule can help borrowers also figure out the most ideal time for prepayments and foreclosure. Prepayments and foreclosures must be opted for at a time when a considerable portion of the interest is yet to be paid. That is when a loan borrower saves the maximum.
In conclusion, a mortgage loan calculator is a highly beneficial tool. It can save you from overestimating your repayment capacity and borrowing a loan amount that you may find difficult to repay at a later stage. The calculator is also quick and delivers results within seconds.
Borrowers can use it, again and again, to understand how different combinations of loan value and tenor will affect their repayment power and monthly budget. Finally, it is also free to use. So, make sure to use a property loan EMI calculator when deciding to apply for a property loan.