Loan Against Property (LAP) is the latest buzz in the dynamic financial landscape for a person requiring large funds for varied reasons, ranging from renovating home to expanding business or pursuing higher studies. Basically, this EMI shall give you fair parity so that you properly plan your finances, ensuring you smoothly integrate the repayments.
Understanding Loan Against Property
A Loan Against Property, more simply referred to as a LAP, is a type of loan that generates funds by mortgaging one’s property. Leveraging the value of the property, this type of loan allows one to access the funds in large numbers, being charged at a relatively lower interest rate.So, in this blog, we will take you through the steps of manually calculating your LAP EMI, which will help you to make an informed financial decision and be at the helm of your borrowing experience. Let’s explore the process in a simple and straightforward manner.
Steps to Calculate Loan Against Property EMI?
Now, you can easily calculate your monthly Equated Monthly Installment for your LAP through the use of an online EMI calculator or by following the steps below:
Step 1: Determine the loan amount: Most of the banks sanction loans up to 80 per cent of the market value of the property. While deciding upon the quantum of loan, consider your financial needs and repayment capacity.
Step 2: Choose the loan tenure : Tenure refers to the time period within which you will repay the loan. The longer the tenure, the lower will be your EMIs. The shorter the tenure, the higher will be your EMIs. Select a tenure that suits your financial condition.
Step 3: Know the interest rate: The rate of interest charged for LAP differs from bank to bank and upon your credit profile. You can check the different interest rates offered by various banks and negotiate the most competitive rate.
Step 4: Calculate the EMI: Once you have the loan amount, tenure, and interest rate, you can use the following formula for calculating the EMI:
EMI= [P x R (1+R) N]/ [ (1+R) N-1]
Here,
P is the principal loan amount.
R is the rate of interest.
N is the number of installments.
For example, if you borrow ₹30 lakhs for 15 years at an interest rate of 10%, your monthly EMI would be:
EMI = [30,00,000 x (10/100)/12 x (1+(10/100)/12)^(15×12)] / [(1+(10/100)/12)^(15×12)-1] = ₹32,238
So, you would need to pay ₹32,238 every month to repay the loan
Step 5: online calculator: You can make the calculation easier by availing of the facility of an online LAP EMI calculator. These are provided by banks and financial institutions, and you will find sliders on such tools, with which you can change the loan amount, tenure, and rate of interest as per your choice and get the EMI immediately.
Using a calculator has several benefits:
- Get quick and accurate results:
- Compare different loan scenarios:
- No manual calculations involved:
- Saves time and effort:
Factors Affecting the EMI of a LAP:
- Loan amount: Higher loan amount means higher EMI, while lower loan amount means lower EMI.
- Loan tenure: A longer tenure results in lower EMIs, while a shorter tenure has higher ones.
- Interest rate: With an increase in interest rate, the EMI increases, and with its decrease, the EMI also goes down.
- Property value: It is the market value of property, which decides the maximum loan amount that can be sanctioned.
You can easily modify these factors with the help of an online LAP EMI calculator to get an EMI that will fit in your budget. Hence, you would be in a position to have all the information at your fingertips and make a viable decision by planning your finances accordingly.
Conclusion:
Therefore,calculating the EMI of a loan against property is an important consideration toward better management of one’s finances.Be it calculating your EMI manually or using an online calculator, knowing what you have to pay each month will definitely help you in better budgeting and avoiding financial stress.Do remember that it is a strong financial tool but one must borrow wisely. With the right approach, unlock the potential of your property and bring your dreams closer while keeping your financial health intact. Now, as you can see, following these steps
outlined in this blog, you are empowered to take control of your loan journey with the confidence that you deserve.
