• Loan Against Property EMI Calculator

    You can easily calculate your Equated Monthly Installments for loan against property by using a Loan against property EMI calculator.

    Now, what is a loan against property (LAP)? As the name suggests, a loan against property refers to a loan sanctioned and disburdened against your property. Loan against property is granted against both residential and commercial property. What you have to do is to keep your property as collateral to get the loan. Based on your property value and other eligibility conditions such as your age, total income, assets, spouse’s income etc. bank will sanction a certain percentage of amount as Loan against Property. Usually, banks offers around 40% to 60% of your property value as LAP.

    What is Loan against Property?

    Loan against property or Mortgage Loan allows you to take a loan where you offer your property as a collateral until you pay back the loan amount on time. You can be a salaried or a self-employed person and if you meet the necessary eligibility criteria, you can avail a mortgage loan to meet your financial needs such as starting a new business, marriage, to pay for your or your children’s education, etc. You can repay the loan through easy EMIs.

    What Purpose does Loan against Property (LAP) Serve?

    Like personal loans (Click here), loans against property helps you fulfill your diversified personal needs. The amount received as loan against property can be used for fulfilling following purposes:

    • Business needs: You can take a loan against property and expand your current business.
    • Marriage : The amount can also be used for arranging your son or daughter’s marriage
    • Educational purpose: You can use your property as collateral and take a loan against it to fulfill your children’s dream of pursuing education in abroad.
    • Arranging a pleasure trip: The same amount can be used for arranging a pleasure trip or funding your dream vacation.
    • Paying medical bill/treatments: Loan against property can also be used for paying of your medical bills.
    • Buying new property: You can purchase new properties with the money received loan against property.

    Thus, you can accomplish a lot task by using the amount offered by a loan against property. Many banks in India such as State Bank of India, HDFC, Axis Bank to name a few offer loan against property at attractive rates of interest.

    Loan against Property EMI Calculator

    There are two ways calculating your EMIs on loan against property. Either you can use the mathematical formula or you can use the online Loan against Property Calculator your monthly EMIs liabilities for loan against property. Calculating EMIs through an EMI calculator is very simple among all other means of calculating EMIs. The only thing you have to do is put the following information in the calculator:

    • Principal loan amount.
    • Tenure of the loan.
    • Rate of interest.
    • Processing fee (if any).

    Once, you enter these information, the calculator will instantly reveal your monthly EMIs liability for a specific loan. Different banks may offer different Loan against property EMI calculators. But the key information that you have to enter remains the same.

    If you use the mathematical formula or excel spreadsheet for calculating your loans against property EMIs, you need to know three variables which include the rate of interest, number of periods, and the value of the loan or present value. Then you can calculate it manually by using the following formula: EMI = [P x R (1+R) N]/ [(1+R) N-1]. Here P stands for the loan amount taken, R for rate of interest and N for the time period for which the loan is taken.

    Benefits of using Loan against Property EMI calculator

    A Loan against property EMI calculator EMI calculator can be useful for you in various ways. Listed below are the major benefits offered by a Loan against property EMI calculator:

    • Firstly, it helps you get the exact amount of your monthly equated installment towards loan against property.
    • It helps you plan your monthly budget and set your other financial goals as you get to know much money you would spend as monthly EMIs.
    • Also, the calculator provides you with a detailed breakup of your total payment procedure. It will provide the loan amortization table which will include how much you have paid so far and how much is left to be paid.

    Factors that affect the Loan Against Property EMI

    Listed below are the key factors that affect the Loan Against Property EMI:

    • Interest rate offered by the lender

    The interest rate of the mortgaged loan plays a vital loan in the repayment amount. Higher the interest rate, higher will be the repayment amount. Initially, when the loan repayment begins the interest amount is usually much higher than the principal amount, usually a 90:10 ratio, which means for the first few installments, a huge chuck of the EMI is the interest amount. As the tenure progresses, the interest amount reduces and the principal amount increases.

    • Tenure the loan

    The shorter the tenure of the loan, the lesser will be the interest rate, which means that the amount to be repaid will be less, but if the tenure is shorter, the monthly installments to be paid will be higher.

    • The loan amount availed

    The higher the loan amount, the more likely it is for the EMI amount to be high as well.

    Loan Against Property Amortization Schedule Illustration

    Let’s assume that Mr. Raj has availed a mortgage loan for Rs.5.5 lakh for a tenure of 1 year. The applicable interest rate is 10.25% and the loan processing fee is 2% of the loan amount. For the 12-month tenure, Raj will have to pay an EMI of Rs.48,418 to clear the loan in 12 months. The monthly installments include the principal amount, interest rate and the processing fee.

    Year Principal Paid(A) Interest Paid(B) Total Payment (A+B) Outstanding Loan Balance
    2019 Rs.3,60,396 Rs. 26,947 Rs. 3,87,343 Rs. 1,89,605
    May Rs. 43,720 Rs. 4,698 Rs. 48,418 Rs. 5,06,280
    Jun Rs. 44,093 Rs. 4,324 Rs. 48,417 Rs. 4,62,187
    July Rs. 44,470 Rs. 3,948 Rs. 48,418 Rs. 4,17,717
    Aug Rs. 44,850 Rs. 3,568 Rs. 48,418 Rs. 3,72,867
    Sep Rs. 45,233 Rs. 3,185 Rs. 48,418 Rs. 3,27,635
    Oct Rs. 45,619 Rs. 2,799 Rs. 48,418 Rs. 2,82,015
    Nov Rs. 46,009 Rs. 2,409 Rs. 48,418 Rs. 2,36,007
    Dec Rs. 46,402 Rs. 2,016 Rs. 48,418 Rs. 1,89,605
    2020 Rs. 1,89,605 Rs. 4,067 Rs. 1,93,672 Rs. 0
    Jan Rs. 46,798 Rs. 1,620 Rs. 48,418 Rs. 1,42,807
    Feb Rs. 47,198 Rs. 1,220 Rs. 48,418 Rs. 95,609
    Mar Rs. 47,601 Rs. 817 Rs. 48,418 Rs. 48,008
    Apr Rs. 48,008 Rs. 410 Rs. 48,418 Rs. 0

    Benefits of Loan Against Property Prepayment

    Certain lenders give borrowers the option of making loan prepayments. For example, if the loan borrower gets an annual bonus of Rs.2 lakh, he/she can opt to prepay the loan to reduce the repayment amount. When the borrower choses to prepay the loan, the lender will give him/her 2 options, to reduce the EMI amount and continue with the same tenure or keep the EMI amount the same and reduce the tenure of the loan.

    If the borrower chooses to reduce the EMI amount, then they will have more money for their monthly expenses, however, if the borrower choses to reduce the repayment tenure of the loan, the interest to be paid to the lender will be reduced as well.

    Eligibility Criteria

    Listed below is the general eligibility criteria set by lender when offering the Loan Against Property:

    • The applicant should be an Indian national and a resident of the country.
    • The applicant should be a salaried individual for a certain period (at least 1-2 years) or a self-employed individual who has been running a business for at least a couple of years.
    • The minimum income of the individual is taken into consideration as a factor for eligibility.
    • The applicant should have a good credit or CIBIL score and a good track record with lenders if he/she has availed a loan before.
    • Should have the original registration certificate of the property.
    • If the property is joint ownership, the partner should be the co-applicant of the loan.

    Documents Required

    Listed below are the general documents requested by lenders when applying for a Loan Against Property for salaried individuals or self-employed individuals:

    Salaried individuals:

    • Identity proof – Passport, Aadhaar card, Voter ID Card, etc.
    • Address Proof – Driving License, Passport, Voter ID card, etc.
    • Salary slips issued by the current company.
    • Form 16.
    • Latest Income Tax Returns.
    • Proof of education.
    • Residence registration certificate, sale deed, etc.
    • Cheque payment for processing fees.

    Self-employed individuals:

    • Organisation or company registration certificate or license.
    • Identity proof – Passport, Aadhaar card, Voter ID Card, etc.
    • Address Proof – Driving License, Passport, Voter ID card, etc.
    • Business profile and proof of business.
    • Income Tax Returns.
    • Balance sheet of the company.
    • Bank statements.
    • Education qualification of the individual.

    Loan Against Property EMI Calculator FAQs

    1. What is the maximum repayment tenure offered by lenders?

      Ans: Generally, the maximum tenure offered by lenders for loan against property is 15-20 years, but a few lenders offer special schemes where the repayment tenure can be extended to 25 years.

    2. Will I pay more if the tenure is longer?

      Ans: No, the longer the tenure, the more you will have to repay the bank due to the applicable interest

    3. What are the best ways to reduce the EMI for Loan Against Property?

      Ans: Choosing a longer repayment tenure will reduce the EMI, however, a better way to reduce the EMI is to make a loan prepayment.

    4. What is the difference between a floating interest rate and a fixed interest rate?

      Ans: As the name suggests, if a borrower chooses a fixed interest rate, then the interest rate will remain the same throughout the tenure of the loan. On the other hand, with a floating interest rate, the interest rate will fluctuate based on the market situation and the interest rate set for Loan Against Property by the lender.

      Floating interest rate has several benefits as the interest rate might reduce from when you availed the loan, however, it could increase as well. In addition, lenders offer certain perks for those who opt for the floating interest rate for loan prepayment and loan foreclosure.

    5. What is the loan-to-value ratio?

      Ans: The loan-to-value ratio is significant when availing a Loan Against Property. It basically means that the bank sets the maximum loan amount that can be availed based on the current value of the property. Generally, private sector banks offer loans up to 75% of the value of the property while public sector banks offer loans up to 65% of the value of the property.

    6. How will I know if my Loan Against Property application is approved?

      Ans: Using the application reference number, you can check the status of the loan on the website of the lender.

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