A loan against property is a type of secured loan you can get by pledging an asset as collateral with the lender against the amount you borrow. The asset could be a residential or commercial property. The asset remains with the lender until you repay the full amount.
Since LAP is a secured loan, you can borrow a higher amount and get a longer repayment term, up to 15 years. Also, loan against property have lower interest rates than unsecured loans like personal loans. Although the EMIs for personal loans are affordable, you may want to know the exact EMI amount you would repay the lender so that you can plan your finances accordingly.
The best way to compute the EMI for a loan against property is to use the loan against property calculator. Let us know more about what it is and how to use it.
What is a loan against property?
The loan against property calculator is a free-to-use online tool that allows you to compute your monthly instalment amount payable to the lender. The tool also helps you know the EMI break-up; you can precisely know the interest payable and the principal amount and determine the total loan cost.
Another significant feature of the loan against the property calculator is that it lets you know the EMI amount for different tenors. You can adjust the period and recompute the EMI multiple times until you get an amount that is affordable and fits your monthly budget. Similarly, you can adjust the interest rate and the principal amount and know the EMI.
How to use the loan against property calculator?
Today, all financial organisations have a loan against property calculator on their website, and they encourage their potential customers to use it to make an informed borrowing decision. Whether you are a first-time borrower or have availed of any loan before, you can use the loan against the property calculator without any hassles; you need not have any technical expertise. You just need to enter some basic information in the relevant sections, and the calculator will do the rest.
The basic information that you must enter is
- Principal amount – This is the amount you want to borrow. Generally, for a loan against property, the lenders offer up to 50% to 60% of the property’s value as a loan.
- Loan tenure – This is the period you want to repay the full amount. You must choose the loan tenure carefully so that the EMI is affordable.
- Interest rate – The interest rate differs from lender to lender but is generally lower than unsecured loans.
After you enter all the details, click the compute or calculate button, and you will get the exact monthly instalment you must pay for the loan.
The formula for calculating the loan against property EMI
Most loan against property calculators use the following formula to compute the EMI.
Loan Against Property EMI = P*r(1+r)^n/([(1+r)^n]-1)
In the above formula,
- P is the principal amount, i.e., the amount you want to borrow
- R is the interest rate
- N is the loan tenure, i.e., your repayment period
Knowing the EMI in advance allows you to compare the different loan offers from various lenders and choose a suitable option.
Thus, a loan against property calculator is a handy tool that allows you to have a hassle free borrowing experience.