A loan against property is usually taken on a long-term basis. The repayment tenure of this loan can stretch up to 20 years. Now, paying the monthly instalments for such a long period naturally requires sound financial planning. You need to be sure of clearing the loan on your monthly income without any defaults.
This is where the role of a loan against property calculator is crucial in deciding whether a loan plan is affordable or not. This calculator is an online tool that helps in the assessment of whether the monthly instalments of a loan plan are within suitable limits.
Here are the values that the loan against property calculator requires you to provide:
Principal amount is the loan amount that you have applied for. Lenders usually provide a principal amount of up to 80% of the property value in case of a loan against property. For instance, if the property value is Rs 90 lakh, the loan amount you can get is Rs 81 lakh. This might differ from lender to lender.
The term during which you pay off the loan against property is known as the repayment tenure. There are lenders who offer tenures up to 15 years to pay off a loan against property. It is advisable to choose a repayment tenure in which you can comfortably pay off the monthly instalments of the loan.
The interest rate of a loan against property will depend on the lender. The interest rate of the loan can be based on the market conditions, your eligibility criteria, and other factors.
Once you have provided all these details accurately, the calculator will then display results for the following:
1.Total interest that is payable
The loan against property calculator will display the total amount of interest that you will incur during the repayment tenure. This is above the principal amount that you have borrowed.
- Total amount that is payable
This refers to the sum total of the principal amount added along with the interest amount that you will incur at the end of the repayment tenure.
- Monthly instalments of the loan
This result displays the fixed monthly instalment that will have to be paid till the end of the repayment tenure. It includes both the interest and principal amounts.
Now, the loan against property interest rate will depend on the lender offering the loan. The other variants, i.e., the loan amount and repayment tenure, can be modified to arrive at a suitable EMI figure. You can keep trying out different combinations till the calculator displays a result that is affordable. An increase in the repayment tenure will decrease the monthly instalments and vice versa. An increase in the loan amount will result in an increase in the EMIs too, so you can try and decrease it if the EMIs are getting out of budget.