All of us dream of
becoming property owners. Whether it is a small piece of land, a commercial
shop or your home, the size of the property surpasses its value. However small or
big a property may be, it gives the owner a sense of financial security. It
also serves as a great asset when one is in a financial emergency. In such
situations, one can easily approach a lender and take out a loan against
property. Banks can help you get a good mortgage on your property, should you
need one. In case you have any idle, immovable property, you can even use it to
generate additional income as well. Moreover, you can accurately calculate the
interest payable against the loan with the help of a mortgage
loan calculator. Let’s find out more about the calculator
in this article.
What
is a mortgage loan EMI calculator?
A mortgage loan EMI
calculator is a special tool that is used to specifically calculate the Equated
Monthly Instalment (EMI) payable for a loan taken against property. It is an
online tool that is freely available on the website of all lenders providing mortgage
loans against property. An easy to use tool, the mortgage loan EMI calculator
computes various permutations and combinations of interest rates, tenures and
principal loan amounts in seconds, thus allowing the lender to accurately
understand the exact EMI he would be paying against the loan.
There is no limit on how
many times the calculator can be used. This enables the borrower to keep
calculating the EMI until he/she arrives at an EMI amount he/she finds
affordable, at fair interest rate.
How
does the mortgage loan EMI calculator work?
Using the mortgage
calculator is extremely easy. You can either download a loan
calculator App on your mobile phone (freely available on Android Google Play
and Apple iOS platforms) or simply visit the loan section of your chosen
lender’s website. To get accurate EMI predictions, it is recommended that you
use the calculator available on the website of your chosen lender.
Once you are in the loan
section, choose the type of loan you need i.e. property mortgage loan and then
begin entering the figures in the corresponding tabs in the calculator.
There
are three main tabs in the calculator. They are:
The
principal loan amount tab – Input the principal loan amount you
need against the property. Remember that most lenders generally offer 50% to
60% of the current market value of your property so ensure you input the figure
accordingly and not the actual value of your property.
The
interest rate tab – Here, you need to input the interest rate
that you think fair against the loan or one that you can afford to pay against
the loan. Remember that you need to check the minimum interest rate offered by
the lender. The interest rate is also determined based on your credit scores,
credit worthiness and previous loan repayment behaviour, so ensure you consider
these factors before inputting the figure.
The
tenure of the loan – While mortgage loans are available for
tenures of 10-20 years, sometimes higher; it is important to calculate and
input the tenure you prefer. Don’t opt for long duration loans just because
they are available.
Once these figures are
entered, the calculator uses the below formula to compute the payable EMI
EMI
= [P x R x (1+R)^N]/[(1+R)^N-1]
One thing to remember
about loans taken against property is that lenders offer fixed interest rates
on short duration loans whereas long duration loans are provided at floating
interest rates. Keep this in mind while using the loan against property EMI calculator.
