A loan against property is a financial tool that informs you of the EMI and interest payable for different tenures and loan amounts. You can use this tool to compare multiple lenders and decide on the ideal borrowing amount and payback tenure. The key features of this tool are that it is quick, free of cost, accessible 24×7, and the results are free from errors. Additionally, you can customise the tool with different variables any number of times. Let’s understand how to use this calculator while discussing other aspects.
How to Use a LAP Calculator?
The key steps involved in using the LAP EMI calculator are as follows.
Step 1:
Unlock your smartphone screen, go to the browser, and enter your lender’s official website URL. On the home screen, search for the ‘Calculators’ section and choose ‘Loan Against Property Calculator.’
Step 2:
On the new webpage, you will see the calculator requiring three different variables. The first one is the loan amount. Move the slider to the desired amount. Make sure the amount is sufficient to meet your business or personal needs.
Step 3:
Choose the interest rate by moving the slider. Most lenders specify the minimum rate applicable to the mortgage loan product. If you believe you far exceed the lender’s minimum qualifying criteria regarding monthly earnings and credit score, your EMI will likely be around the minimum rate specified.
Step 4:
Enter the desired repayment tenure by moving the slider. Refer to the loan features section on the website to understand the minimum and maximum tenure for the mortgage loan product. For example, if you borrow a loan against property with Godrej Capital, your repayment tenure can go up to 25 years.
Step 5:
Click on ‘Submit,’ and the calculator will display the result by highlighting the EMI, interest payable, and total payable.
Here is a practical example to show the results of the EMI calculator.
Suppose you want to borrow Rs 65 lakhs and expect the interest rate to be around 10.25%. You are confused between tenures and hence use the calculator.
The results will be as follows.
Parameters | Repayment Tenure | ||||
| 5 Years | 10 Years | 15 Years | 20 Years | 25 Years | |
| Loan Amount | Rs 65,00,000 | Rs 65,00,000 | Rs 65,00,000 | Rs 65,00,000 | Rs 65,00,000 |
| Interest Rate | 10.25% | 10.25% | 10.25% | 10.25% | 10.25% |
| EMI | Rs 1,38,907 | Rs 86,800 | Rs 70,847 | Rs 63,807 | Rs 60,215 |
| Interest Payable | Rs 18,34,403 | Rs 39,16,042 | Rs 62,52,426 | Rs 88,13,637 | Rs 1,15,64,474 |
| Total Payable | Rs 83,34,403 | Rs 1,04,16,042 | Rs 1,27,52,426 | Rs 1,53,13,637 | Rs 1,80,64,474 |
The table suggests that a shorter tenure is best for making your loan cost-effective. However, longer tenures are ideal if you are simply looking for pocket-friendly EMIs.
Advanced Features of the LAP Calculator
Beyond EMI computation, LAP calculators can have the following functionalities.
1. Prepayment Options
Most LAP calculators allow you to determine how your monthly obligations will change if you make a partial prepayment towards your loan.
The lender gives you two options when you opt for a partial prepayment. You may shorten your repayment tenure while keeping the EMIs the same. Alternatively, you can continue with the same tenure while making your EMIs more affordable.
The calculator gives you an idea of how much additional interest you will be paying in both scenarios.
2. Eligibility Check
These days, lenders have eligibility check calculators on their websites. You must provide your monthly income, debts, age, and work experience to use them. Based on this information, the tool provides a rough estimate of whether you qualify for the loan or not.
However, remember that the results might differ when you submit your application and attach supporting documents. For example, if you mention the annual CTC to be Rs 7 lakh, but when you submit your appointment letter and salary slip, it shows Rs 3 lakh as a variable income linked to your performance, the eligibility may change.
3. Amortisation Schedule
Have you ever wondered how much of your loan instalment goes towards principal repayment and how much goes towards the interest component? Most borrowers fail to understand how EMIs work. That is where an amortisation table helps with that.
This tool splits your EMI into interest and principal repayment amounts from the first month of repayment to the loan conclusion.
When reading an amortisation table, you will notice that you pay more in interest during the first few months of the repayment period. As the loan progresses, more of your money goes towards principal repayment.
Key Points to Remember When Using a LAP Calculator
- When you borrow against property, there are various charges. You pay processing fees, NACH mandate charges, CERSAI fees, and a few more. Also, various situation-based charges can arise during your repayment, such as prepayment fees and restructuring charges. An EMI calculator disregards these additional expenses and only considers interest payments when computing results.
- The result provided by the calculator is just an estimate. The actual EMI and interest rate might vary significantly during credit appraisal.
Conclusion
Using an LAP calculator is simple. To view the results, you only need to enter the repayment period, rate of interest, and borrowing sum. However, be aware of the tool’s limitations and make sure you connect with the lender’s executives to understand the loan terms and conditions.
