Growing financial environmentThe contemporary financial arena has paved the way for a reality where availing loan against property (LAP) is one of the most practical methods to procure substantial funds. A loan against property is a type of loan that enables individuals to take a loan by leveraging their residential, commercial or industrial properties. This secured loan option typically comes with lower interest rates than an unsecured loan. However, before you borrow such a loan, make sure to correctly calculate the EMIs so that they fall in line with your financial plan. A loan against property EMI Calculator can help facilitate this task.
In this post, we will help you learn how to calculate EMI on loan against property and what factors determining interest rates of LAP are, while suggesting why using the loan against property EMI calculator in India saves a lot of your time for the precise results.
What is an EMI?
EMI – EMI or Equated Monthly Installment is the amount you pay each month towards repaying your loan for an agreed upon time period between you and the lender. An EMI consists of two components: principal amount and interest on the loan. The proportion of interest is more in the beginning period, but the component towards principal is higher as the time progresses.
It keeps you familiar with your EMI in advance so that it does not surprise you every month and can manage the monthly expense accordingly which is good for financial planning. The most precise way of calculating these monthly payments without undergoing manual calculations is through a loan against property EMI calculator.
The EMI Calculation Formula
And if you are the kind of person who wants to know how the maths looks behind a tool used in finance, then this is how that EMI is calculated:
EMI = [P × R × (1+R)^N]/[(1+R)^N-1] Here: EMI is the equated monthly instalment P is the principal amount or borrowed amount, R rate of interest per month N number of installments.
Where:
P = Loan amount (principal)
R Monthly Interest R = (Annual interest rate/12)/100
N = Loan tenure in months
The above formula gives correct results but calculation of EMI manually with the help of this formula might be complicated and erroneous. Here comes how loan against property EMI calculator can make it easy for you.
What is a Loan against Property EMI Calculator?
A loan against property EMI calculator is an online tool offered on the website of most banks, Non-Banking Financial Companies (NBFCs) and other lending companies. This calculator helps you compute your exact EMI by putting in just a few details about your loan.
By Simply Inputting:
Amount of Loan (P): The total amount which you need to have lent.
R = annual interest rate the lender offers
Loan Term (N): Duration of the loan payment in months
The EMI value calculated by the calculator is quickly displayed and serves as a guarantee of ignorance to error.
EMI for Loan Against Property – What Determines It?
Here are a few factors that determine the EMI for availaing a loanagainst property: The key variables Here is a closer look at some of the most important factors:
Loan Amount
The EMI is calculated on the basis of total amount borrowed from the lending entity. Your EMI results into more and you pay owing up large loan amount. Maximum banks and finance companies in India allow borrowers to go for a LAP up to 50–70% of the market value of their property.
Interest Rate
Interest rate is directly proportional to the EMI. With higher interest rates your monthly payment gets bigger, of course. Put this rate on your radar when shopping for a lender. One of the most important things to do is to compare interest rates with several lenders in order to get the lowest possible rates on terms that work best for you. An LAP EMI calculator in India explains to you how the interest rate influences your repayments.
Loan Tenure
A factor that can’t be overlooked, is the term of the loan or time, in which you repay it back. Opting for longer tenure results in lower monthly EMI but will increase the interest outgo over the time. On the other hand, shorter tenure leads to higher EMIs but reduced interest outgo. The tenure of most loan against property plans in India is 5–20 years.
Special Charges and Processing Fees
It’s also common for lenders to levy fees, like application or prepayment fees that can affect the cost of borrowing indirectly. Though these fees do not directly affect the EMI, they raise the overall loan cost.
You can even consider these factors via a loan against property EMI calculator and calculate your monthly dues accordingly.
Advantages of an Loan Against Property EMI Calculator India
Saves Time and Effort
It is a hassle to calculate EMI manually, it takes lot of time! not only offers relief, but also saves time with the loan against property EMI calculator in India, ensuring on-the-dot results at an instant!
Provides Accuracy
Manual calculation is prone to error, particularly with larger amounts. Automatic EMI calculators are very accurate and makes sure that you don’t make an error, which might lead to financial strain.
Helps Compare Loan Offers
An EMI calculator will allow you to easily compare multiple offers from lenders. You can find the cheapest loan by changing the loan amount, interest rate and term.
Assists in Financial Planning
When you know your EMI early, you are also able to organise monthly expenses better. This helps alleviate the pressure of unplanned debt repayment.
How to use Loan Against Property EMI calculator?
Here is the easy step-break down to use a loan against property EMI calculator in India:
Go to the Calculator Page- All banks and NBFCs have separate EMI calculator tools on their websites.
Fill in Loan Details: Fill in all the necessary details like loan amount, rate of interest and tenure.
Modify and review: Change tenures, interest rates to understand how much strain EMI payments will have on your repayment liability.
Results can be viewed: Just type the details and you get the EMI value without any delay along with other information such as total interest payable or overall repayment amount.
Practical Example of EMI Calculation
Consider Mr. Sharma. He wants to avail loan against his property of ₹50 lakhs at an interest rate of 9% per annum with tenure period as 15 years (180 months). He comes across an EMI calculator and feeds in the following details:
Loan Amount (P): ₹50,00,000
Interest Rate (R): 9% per annum or 0.75% per month
Duration (N): 15 years = 180 months
Once you enter these values, the EMI calculator will show ₹ 50,694 as the payable EMI. The calculator may also display the total interest due and the total amount payable.
Wrapping Up
A loan against property EMI calculator is a useful and convenient online instrument that prevents the hassle of guessing when it comes to your finances. EMI calculation has become easy with the digitization of financial tools. This tool is a must-have whether you are salaried, self employed or a business owner for processing your own report before making the final loan application.
If you’re thinking of availing of a loan against property in India, here’s why you need to consider an EMI calculator on your way through the process. Try varying the loan amount, tenure and interest rate to achieve a payment you feel comfortable with. Make sure you keep an eye on prevailing interest rates and hidden charges while comparing lenders, as well as select a tenure that leads to EMIs which can be repaid comfortably.
After all, the loan against property EMI calculator in India is a great friend in your quest to get your hands on the funds required without compromising on financial stability!