Crunch the Numbers with a Property Loan Calculator

Loans against property are a type of equitable mortgage loan. Under these loans, a borrower pledges a property they own as collateral and avails of a loan against it. One must, thus, avail of a loan against the property after deliberate planning. Careful financial planning and correctly assessing your repayment capacity will help you avoid any kind of trouble in the future.

A property loan calculator is an online tool that lets borrowers calculate their loan EMIs, the total interest payout on the loan as well as the total cost of borrowing the loan and therefore, correctly assess the affordability of a loan. More importantly, the calculator also gives users a detailed amortization schedule, which is essentially a detailed and tabular representation of one’s periodic loan payments and the breakup of one’s principal and interest payout each month. 

Before we talk about the property loan calculator in more detail, let us understand loans against property and the concept of property loan EMIs. 

Loan Against Property and Loans Against Property EMIs

Loans against property, also referred to as property loans or mortgage loans, are loans availed of against a residential or commercial property or a piece of land. The papers of the property that serve as collateral stay with the lender until the borrower has repaid the loan in full. Once the borrower repays the loan completely, the lender removes the lien from the property and the property once again belongs entirely to the borrower. Both salaried and self-employed individuals can apply for property loan. Property loan tax benefits can help borrowers reduce their tax liability by a significant margin.  

Loans against property are repaid in the form of home loan EMIs. Each EMI constitutes a principal component and an interest component and while the EMI remains the same throughout the tenor of the loan (if you are on fixed interest rates), the interest and principal components of the EMI change with time. During the early years, the interest component of the loan is much higher than the principal component. As the tenor advances, the principal component overtakes the loan component. 

Calculating loan EMIs is important as it helps borrowers assess the feasibility of a loan and decide whether they should change the loan tenor and value to enhance eligibility and affordability. Let us now look at the factors that affect EMI calculation and the steps to use a property loan calculator. 

Factors that Impact Loan Against Property EMIs

These are the factors that affect loans against property EMI calculation. 

1. The loan amount that you apply for will have a direct impact on your EMIs. The higher the loan amount, the higher will be your EMIs. It is thus that loan applicants are advised to opt for low LTV ratio loans. 
2. The loan tenor you go for will have an indirect impact on your loan EMIs. The longer the loan tenor, the lower will be your EMIs. However, an increase in one’s loan tenor also increases one’s interest payout on the loan. Therefore, borrowers should neither go for a very long nor a very short loan tenor. 
3. Lastly, the property loan interest rate you get is important as it directly impacts your loan EMIs. A high-interest rate leads to high loan EMIs and a high cost of borrowing funds. A low-interest rate, on the other hand, translates into low EMIs and a low cost of borrowing funds. Thus, loan applicants must try and avail themselves of the lowest interest rates possible. 

Steps to Use Loan Against Property Calculator 

1. Enter your desired loan amount. 
2. Next, enter your desired loan tenor. 
3. Finally, enter the property loan interest rate you are being offered.
4. Click on Calculate.

The output page of the property loan calculator will give you your loan EMIs, the total interest you will have to pay on your desired loan value and the total cost of borrowing the loan. 

To sum up, here is why you must a property loan calculator. 

1. The property loan calculator helps you save time and effort, which you can divert to other important tasks. 
2. The results delivered by the property loan calculator can be trusted for accuracy every single time, which unfortunately is not the case with manual calculations. 
3. The calculator is free to use. One need not pay any fee to use this handy tool. Further, one can use it while on the go.
4. With the help of the property loan calculator, borrowers can try different combinations of loan tenor and loan value until they arrive at a combination that delivers satisfactory and affordable EMIs. They can also use the calculator for repayment planning. 
5. With the help of the property loan calculator and the amortization schedule provided by it, borrowers can also plan prepayment and foreclosure.