A financial emergency can occur at any moment in life, and that is when one can put his/her property to use. A loan against property comes with no end-usage restriction, so one can use the fund for other purposes like financing weddings, higher education, or even buying another property. But the question that comes into borrowers’ minds is how much mortgage loan they can afford. They can find out the answer quickly with the help of a mortgage loan calculator.

What Is a Mortgage Loan Calculator?

A loan against property EMI calculator is a computerised online tool that helps compute the payable interest, monthly instalments, and total cost of the loan. 

The mortgage loan also enables the borrower to adjust the loan amount and tenor to get an EMI value that fits perfectly according to his/her repayment capacity. This way, borrowers can plan their finances from a much earlier stage and reduce the chances of default. A mortgage loan calculator gives a borrower details on the total payable interest and a few other things like-

  • EMIs for the entire repayment tenor
  • The principal component and interest of EMI
  • The remaining balance that is due after payment of each EMI

Along with that, borrowers must remember that during the repayment tenor, the interest and principal component of EMI will keep changing every month. In the initial repayment period, the interests form a major part of the EMI and the principal component increases as the tenor increases. 

So, with the help of a commercial property loan calculator, a borrower can get all the loan repayment details and choose the best lender with low-interest rates.

How to Use a Mortgage Loan Calculator?

Individuals need to follow the given steps to use a mortgage loan calculator:

Step 1:

Visit the website of the lending institution

Step 2:

Individuals need to find the loan against property EMI calculator on the website

Step 3:

Then, individuals need to enter the loan amount, interest rate and loan tenor

Step 4:

Individuals need to click on ‘calculate EMI’ to derive their EMI payments.

Apart from using a calculator, individuals can also do the EMI calculations manually or use MS Excel sheets.  The formula is-

EMI = P × r × (1 + r)n/((1 + r)n – 1)

Here, P stands for the principal loan amount, r is the rate of interest, and n is the loan repayment tenor. 

However, manually calculating the EMIs is time-consuming and can lead to factual errors. Moreover, manual calculations do not leave the option of readjusting the principal amount, interest rate or loan tenor to derive an ideal and affordable EMI. With the help of a mortgage loan calculator, borrowers can decide on the lender per suitability. 

Even a small decimal change in the rate of interest can lead to significant changes in EMI amount and have long-term benefits. Thus, borrowers should make the best use of these calculators before applying for a loan against property.

Besides knowing how to calculate EMIs to derive a suitable mortgage amount, borrowers should also know the eligibility criteria they should meet to qualify for a LAP. The eligibility criteria are different for salaried and self-employed individuals. 

A commercial property loan involves EMI repayments for long tenors, like 20-25 years. However, borrowers should be aware of the charges on their loan against property that they need to pay other than the loan amount. Being aware of the charges beforehand can help borrowers prepare better both mentally and financially. 

Loan applicants should also check their pre-approved offers on the websites of the financial institutions. They can check them by entering their names and contact numbers on the websites of the financial institutions.A mortgage loan calculator is a free, easy-to-use and readily available tool that individuals must use before applying for a mortgage loan. This will give the borrowers a fair idea of what their EMIs will be and how much loan they can afford. However, individuals should not forget to negotiate with the lending institution for the best offers.

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