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The LAP can be used for a host of financial requirements ranging from managing wedding expenses, medical bills, purchasing another property, to even starting a business.
A mortgage calculator provides a detailed view of the loan EMI and amortization schedule to make it easier for the borrowers to initiate the loan application process with confidence.
How Does Home Credit Help You Save on Your Mortgage Payments?
However, any amount above the threshold limit of the account will be automatically transferred to the mortgage loan account to help reduce the outstanding amount. As the outstanding amount will fall, so will the total interest that the borrower will pay towards the loan.
Not only this, but the surplus amount available in the Home Credit account can be fully withdrawn by the borrower as and when required. So, even the emergency funds that one generally deposits in a savings account can be deposited into this Home Credit account as any surplus amount can be instantly withdrawn, just like any standard savings account.
How Does a Mortgage Payment Work?
The loan amount and tenure primarily determine the monthly mortgage loan EMI. Just like other types of loans, the longer the mortgage loan tenure, the lower will be the monthly EMI. The monthly EMI has two main components- principal and interest.
A portion of every monthly instalment is reserved for repaying the principal balance or the amount taken as the mortgage loan. Just like other types of loans, the LAP loans are structured in a way that the principal component in the EMI starts low and continues to rise with time throughout the repayment tenure.
The interest rate at which the mortgage loan is taken also impacts the monthly EMIs. The higher the interest rate is, the higher will be the EMI amount. While the principal component starts low and then increases with time, the interest component is higher in the initial months of the loan and falls with time.
However, the EMI amount mostly remains the same throughout the loan tenure. Only the percentage of principal and interest component changes with time. The amortization schedule generated by the mortgage loan EMI calculator can help borrowers understand this shift in detail.
Factors Affecting Loan Against Property EMI
The total amount taken as a loan from the lender has a significant impact on the monthly EMIs. Higher loan amounts will result in higher monthly payments. Note that borrowers are only allowed to borrow up to 50%-60% of the cost of their pledged property as a LAP. The limit can vary between lenders and even on the basis of property type.
Even the tenure for which the LAP is taken will affect the EMI amount. Longer tenures have lower EMIs, and shorter tenures have higher EMIs. So, the EMI for a loan of Rs. 10 lakhs taken for 5 years will be higher than the Rs. 10 lakh loan taken for 10 years. A borrower should carefully select the tenure so that the EMI amount is affordable and can be conveniently paid every month.
The interest rate at which the LAP is taken also has a crucial role in EMI calculation. So, if the loan amount and loan tenure is the same, the monthly EMI of the loan taken at a higher rate will be higher than the EMI of loan taken at a lower rate. The interest rate can vary between lenders. One should lookout for a reputable lender that offers LAP at competitive rates.
Loan Against Property Prepayment Calculator
This facility is ideal in scenarios when a borrower has surplus money that can be paid to the lender. Once such lump sum payment is made, the borrower then has two options-
- Reduce the loan tenure and keep the EMI the same as before
- Reduce the EMI amount and keep the loan tenure the same as before
The mortgage loan calculator also has the option of calculating LAP prepayment to help borrowers understand how both of these options will impact their repayment schedule and EMI amount. The borrowers can also consult the lender to select the option that best meets their requirements.
Amortization Schedule Appearing in Loan Against Property Calculator
Suppose if a borrower takes a LAP of Rs. 20 lakhs at 9% for 10 years. Using the mortgage calculator, the monthly EMI amount comes at Rs. 25,335. This EMI amount will remain the same throughout the loan tenure, unless any changes are made to the interest rate or if any amount is prepaid.
Here is the amortization schedule example for the first 5 months-
|Month||EMI||Interest||Principal||Balance Principal After EMI Payment|
|1||Rs. 25,335||Rs. 15,000||Rs. 10,335||Rs. 1,989,665|
|2||Rs. 25,335||Rs. 14,922||Rs. 10,413||Rs. 1,979252|
|3||Rs. 25,335||Rs. 14,844||Rs. 10,491||Rs. 1,968,761|
|4||Rs. 25,335||Rs. 14,766||Rs. 10,569||Rs. 1,958,192|
|1||Rs. 25,335||Rs. 14,686||Rs. 10,649||Rs. 1,947,543|
*Disclaimer- This calculation is for illustrative purposes only.
As can be seen above, while the monthly EMI remains the same, the interest amount starts falling right from the first month, and the principal amount keeps rising. This continues until the end of the loan tenure when you finally repay the entire loan amount.
In other words, the ‘interest’ part is the highest in the first month of repayment and the lowest in the last month when the loan is fully repaid. On the other hand, the principal amount is lowest in the first month and the highest in the last month of the loan repayment.
Get Detailed Amortization Schedule with Mortgage Calculator
Individuals wanting to apply for a Loan Against Property can always contact the lender to know more about the application process and understand the repayment schedule.
Mortgage Calculator FAQs (Frequently Asked Questions)
What is Loan Against Property EMI?
Loan against property EMI is a fixed amount that a borrower must pay until the loan amount is repaid. EMI stands for Equated Monthly Instalment. It consists of two parts-interest and principal.
How Does a Loan Against Property EMI Calculator Work?
Manually calculating loan against property EMI can be difficult. However, you can calculate the amount easily by using a loan against property calculator. You will have to enter details such as the principal amount, the interest rate, and the loan tenure. Once you enter these details, the calculator will provide you with the EMI amount.
How to Use A Property Loan EMI Calculator?
A property loan EMI calculator requires details like the principal amount, the interest rate, and the loan tenure. The calculator will calculate the EMI amount when you enter these details.
How is Principal and Interest Split in EMI?
An EMI consists of two parts-principal and interest. In the initial years, the interest part is higher. When a borrower starts paying EMIs, the interest is first paid. The interest part comes down to zero by the end of the loan tenure. Then, the EMI contributions go to the repayment of the remaining principal.
How to Use Mortgage Calculator?
The details that a mortgage calculator requires to calculate the EMI amount are the loan amount, the interest rate, and the loan tenure.
What is the Maximum Tenure for Which I Can Get a Property Loan?
The loan tenure ranges from 15-20 years.
DisclaimerThe information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.