In the Indian debt market, a loan against property is one of the most widely used loan product. This category comprises more than 40% of all credits in India. These loans are a popular option for prospective lenders due to their secured nature. Borrowers find it easy to obtain such loans because they have option to pledge their property as a guarantee. Although, it is very important to be certain about every minute details when proceeding for such loans. Details like rate of interest, EMIs loan duration, etc. can be obtained easily using a loan against property calculator.
How Can a Loan Against Property Calculator Help You?
Well, the process of calculating the EMIs, amount available against a property, duration of loan, etc. is complex and involves multiple variables. Therefore, for those not familiar with the details of EMI calculation, it can be a tough task. In such a case, loan against property calculator can come in handy.
- Property loan calculators allow you to do complex calculations in seconds and save time that could be spent more productively.
- Such calculators eliminate any chance of inaccuracies in the calculations.
- These calculators allow you to plan for your repayment strategy by providing you with precise information.
How is Property Loan EMI Formulated?
Almost all online calculators use the same formula to calculate the property loan EMIs. The NBFC’s and bank’s loan calculators use the same standardized method.
They use this method to accurately calculate the amount you would need to pay in EMI against your loan.
Formula for Calculation of EMI
EMI = [P * R * (1+R)n]/ [(1+R)(n-1)]
Where, P= Principal amount
R= Rate of interest
And n= Time or Tenure
Here, we can see calculating EMI is quite a strenuous process and can consume a lot of time. Therefore, to save your precious time, lenders provide a free online tool to calculate EMIs in seconds.
What Is the Meaning of Reducing Interest Rates on Property Loans?
The interest charged on a property loan at a flat rate is calculated on the loan amount during the repayment period. If you take out a loan at either a reducing interest rate or a lower balance rate structure, interest is only calculated on the remaining loan amount.
If you make monthly payments, the interest rate for the remainder will be calculated on your outstanding loan balance.
Which One to opt Between Fixed Interest Rates and Floating Rates?
The Marginal Cost of Lending Rate or the MCLR is what links the floating or variable interest rate. The MCLR can change when the interest rate moves. So, the interest rate may fluctuate.
- You will pay the same interest rate throughout your loan repayment period, only if you take out a property loan at a fixed rate.
- Although, a fixed interest rate gives you the benefit of knowing exactly what you will be paying over the loan term.
- A fixed interest rate is a good option for people who like to plan their finances a few years in advance.
However, if you are not averse to fluctuating interest rates, you can opt for a floating interest rate. A variable interest rate benefits you by decreasing the repayment amount when the interest is low.
Consider These Points When Proceeding for a Property Loan:
- Pre-closure fees: Some lenders may charge a pre-closure fee. Check to see if the financial institution you are applying to imposes a pre-closure fee or not.
- Customer service: A lender with good customer service support is essential for a positive borrowing experience. Before you submit your loan application, make sure you check out the available customer service channels and how prompt they are in responding to your needs.
- Duration of loan disbursal: If you’re looking for a personal loan to cover an immediate need, you should consider the loan disbursal timing.
- Additional charges: If the interest rate is high, the lender may not charge you any additional fees. However, you might be able to lower the total cost of the loan by lowering the cheque/EMI bounce, instrument return charges, and stamp duty charges.
Prior to applying for a property loan, it is wise to calculate your EMIs. You can calculate your EMI manually. But a loan against property calculator will give you better estimates. Make the best use of it by comparing repayment affordability for different loan amounts plus tenures and apply accordingly.