Managing Finances with Property Loan EMI Calculator: A How-To Guide

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Let’s start by discussing the LAP loan meaning first. Property loans are also known as loans against property or simply LAP. These are loans sanctioned against a property one owns. The pledged property could be residential or commercial. Some lenders also sanction loans against the land.

Loans against property are backed by collateral. Therefore, the risk for a lender is low in the case of such loans and hence, they generally charge a nominal rate of interest on these loans. Further, lenders are not also always extremely stringent about loans against property eligibility requirements. 

Borrowers can borrow up to 75% of the pledged asset’s fair market value as a loan and can take up to 20 years to repay the loan money. These factors work in favour of loans against property and add to the popularity of this financing tool. However, individuals planning to avail themselves of a property loan must still be cautious and make the best use of the Property Loan EMI Calculator

Property Loan EMI Calculators are online tools that let borrowers calculate the loan EMIs for any specific combination of loan value and tenor. Since the property loan interest rates are decided by the lender, they remain constant. However, borrowers can play with different combinations of loan value and tenor until they arrive at a combination that works best for them. 

While using the Property Loan EMI Calculator, borrowers generally make two mistakes. First, they overestimate the value of the property they plan to pledge as collateral and therefore, ask for a loan amount higher than their mortgage loan eligibility permits. This is one of the main reasons why loan applications get rejected. The second mistake that people make is opting for a short repayment tenor to increase one’s chances of loan approval and reduce the interest payout. 

Borrowers must always choose a loan tenor that allows them to comfortably repay their loan, without defaulting, even if the interest payout is slightly higher.

Let us now walk you through the process to use a Loan Against Property EMI Calculator. 

  1. To start with, enter the loan amount that you wish to borrow. While deciding the loan amount, keep your income and mortgage loan eligibility in mind.
  2. Next, enter the number of years you want to repay your loan. Please keep in mind that loan affordability should be your priority while deciding the loan amount to be sanctioned to a borrower. The interest you will have to pay on the loan comes second. 
  3. Lastly, enter the mortgage loan interest rate you have been offered by your lender. A high credit score, a stable job and income, a low LTV ratio and a low debt-to-income ratio will help you score low-interest rates and pay off the loan easily. 

Once you enter these three details into the calculator, you will see on your screen the loan EMIs that you will need to pay along with the total interest payout and total cost of borrowing the loan.

If you are satisfied with the numbers you see on your screen, go ahead and apply for a loan. However, if you think that the loan EMIs are unaffordable, keep trying different combinations until you arrive at a loan amount and tenor that gives you affordable results.

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