A part of the secured loans category, a loan against property or mortgage loan offers you credit in exchange for submitting a residential or commercial property that you own as collateral. This loan gives you a large loan amount on the basis of the market value of the property you pledge.
That said, when taking a large loan such as this one, drawing up a repayment strategy is of utmost importance. To do so, knowing your mortgage loan EMI is key. However, since the EMI is only determined after a complex calculation involving the principal amount, tenor and mortgage loan interest rate, it is advisable to do away with pen and paper and use a mortgage loan calculator instead. This calculator gives you the EMI that you will have to pay based on the parameters you enter. There are 3 main fields you need to fill: the loan amount, the mortgage loan interest rate and the loan tenor. Once you fill in these details, the calculator does the math and gives you the EMI amount instantly.
Understand how this works when you use the Bajaj Finserv Loan Against Property EMI calculator by assuming you are eligible for a loan amount of Rs.50 lakh and obtain a mortgage loan interest rate of 11%. On judging your financial obligations, you set your repayment tenor as 15 years or 180 months. Once you enter in these parameters into the calculator, you can view your EMI as well as the total interest payable. In this case the EMI is Rs.56,830 and the total interest payable is Rs.52,29,337.Having understood how to use the mortgage loan EMI calculator, consider the benefits you get when you use it.
Compare between Lender Offerings
The interest rate and tenor options for a loan vary across lenders. By feeding various combinations into the calculator, you can thus find out which lender keeps your EMIs and total interest payable to a minimum while giving you the amount you need through a loan against property. In this regard, even a marginal change in the interest rate can make a huge difference. For example, if one lender offers you an interest rate of 11.5% and not 11%on a Rs.50-lakh loan taken for 15 years, your EMIs will jump up by Rs.1,579 and your total interest payable will increase by a whopping Rs.2,84,539.
Settle on the Right Loan Amount and Tenor
Your EMIs and interest payments are dependent on the principal amount and tenor you choose. If you find that the EMIs are too high, you can consider borrowing a lower amount. For example, if you reduce the principal from Rs.50 lakh to Rs.40 lakh, your EMI becomes Rs.45,464 and total interest Rs.41,83,483. In this way, by using the calculator you can zero-in on the right loan amount and then look at homes basis your affordability.
Alternatively, you may find that you are happy with a loan of Rs.40 lakh, but wouldlike the EMIs to be lower still. In this case you can simply alter the tenor. By changing it from 15 to 18 years, you can lower theEMIs to Rs.42,602, an amount that is likely to fit in better with your monthly expenses.
Ramp up EMIs when Possible and make Prepayments
During your repayment tenor should you find yourself with surplus finance, you can ask your lender to increase your EMIs and shorten the tenor. This is because a longer tenor implies higher interest payable. If you consider the preceding example, when you change your tenor from 15 years to 18 years for the Rs.40-lakh loan, your total interest becomes Rs.52,02,025 instead of Rs.41,83,483.
Optionally, if you come across a surplus of funds, you can also prepay or foreclose the loan ahead of time. Assume that you have borrowed Rs.50 lakh for 15 years or 180 months, but receive payment from an overseas client that will allow you to prematurely close the loan in the 151st month. You can pay Rs.14,84,615 to do so and save 4% interest.
Now that you know how to tailor a loan against property to suit your finances and address your business needs, opt for an outstanding loan such as the Bajaj Finserv Loan Against Property. Here, you get high-value loans of up to Rs.3.5 crore in 72 hours and benefit from flexible tenors of up to 20 years. In fact, you can avail the Flexi Loan feature on this loan and borrow as you go and pay interest on what you use. Moreover, you can pay interest-only EMIs while repaying the principal at the end of the tenor.
What’s more, if you are looking for instant mortgage loan approval, check your pre-approved Loan Against Property offer from Bajaj Finserv.This will help expedite the process further.