As with any other type of loans available in the market, a key factor to consider before choosing the best loan against propertyoption is the applicable EMI for loan against property. Based on the loan principal amount, time of loan maturity(loan tenure), and the applicable interest rate, you can use the Loan against property EMI calculator to figure out the monthly payouts. The loan principal itself would in fact be based on an applicant’s personal finances andcalculating the EMI ahead of can help you determine if you have a high or low chance ofbeing disbursed a loan. Even if one applies for fixed interest rates, the interest component in the EMI amount keeps shifting asthe loan tenure progresses because both the principal as well as the applicable interest on the loan are paid off simultaneously using EMIs. With the Paisabazaar for Loan against Property EMI Calculator, you can easily choose the Loan against property quotes and tenure, which offer you the most suitable repayment opportunity.
Loan against Property EMI Calculator
The most important factor to consider before choosing the best LAP is the applicable EMI for the loan disbursed to you. Based on the loan amount, time till loan maturity (tenure), and the applicable interest rates, the EMI is calculated, and based on an applicant’s personal finances, the EMI can play a major role in the appropriation of a loan. Even if one applies for fixed interest rates, the amount to interest proportion in the EMI amount keeps shifting, till the time of loan maturity. With the Paisabazaar EMI for Loan against Property Calculator, you can easily choose the loan quotes and tenure, which offer you the easiest repayment opportunity.
The EMI that is applicable on a loan can be manually calculated with the following formula:
EMI = [P x R (1+R) N]/ [(1+R) N-1]
• P represents the principle amount, or the loan amount that has been availed
• R represents rate of interest that is applicable on the loan
• N represents the total number of months for which the loan has been availed for
For further ease, the EMI can be calculated online by using the Paisabazaar LAP EMI Calculator. All you would have to do is enter the loan amount, applicable interest rate, and the time period or tenure of the loan, based on which the EMI liable for payment will be calculated automatically.
How does LAP EMI Calculator works?
To use the EMI Calculator for loan against property you will have to complete the following steps:
Step 1: In the first part, you need to enter the principal amount of the loan that you wish to apply for.
Step 2: In the second section, you will subsequently need to enter the rate of interest that has been offered for your desired loan amount.
Step 3: In the third section, enter the tenure over which you would like to repay the amount borrowed. The tenure generally offered in case of a LAPrangesfrom 10 to 15 years (which may vary with each bank).
Step 4: As all the details are entered, the EMI payable will show up automatically on the right side on the right hand side of the calculator page. To check the EMI for different criteria sets, it is very easy to alter the information that you entered in the three sections to view the updated EMI. You can change the variable by either moving the sliders provided or by manual input of the different variables.
Loan against Property: An Overview
Loan against property is an option that is available to anyone who owns a self-occupied residence, a commercial property or even a plot of land. The main requirement to avail loan against property on the side of the lender is that there is no other encumbrance on the property i.e. the owners have full control of the property without any restrictions.
One of the key of benefits of availing LAP is that as it is a secure loan, the lending rate for a LAP is much lower as compared to some other loan options like personal loan. However, owing to the structure of lending, they can be slightly higher than other mortgage loans.
The most important benefits of availing LAP are that it is one of the most secure loans and the lending rate for a LAP is therefore very low as compared to other loans. But, owing to the structure of lending, they can be slightly higher than other mortgage loans.
Things to know before you apply for a Loan against property
LAP is a great way to raise a large amount of money in a short period of time. Owing to the fact that the interest rates offered on this type of loan are lower than those offered with other loans like a personal loan and the repayment tenure is longer, LAPs have garnered certain popularity amongst applicants. Additionally,the amounts sanctioned can be as high as 80% of the property value, which may be used to access a large sum of money as a loan. In any case, it is good practice to use the online loan against property EMI calculator to figure out the expected monthly payouts. However, a home is an important part of a person’s life and before you mortgage it for a loan, it is essential to know as much as you can about this unique secured loan option:
• Compare the LTV (loan to value) ratio that is offered by various banks: It is of utmost importance that you get the best deal when applying for ALAP. In this aspect, it is necessary that you compare the various LTV ratios that different banks are offering. This value refers to ratio between the loan offered and the market value of the property being mortgaged. In case of private sector banks, on an average up to 75% of your property value may be sanctioned as a loan, while in case of public sector banks, up to 65% of the property value is usually sanctioned as a loan against property. This variation is affected by a number of factors like the banks’ internal rules or the manner of property evaluation, which may restrict the LTV that is offered.
• LTV of commercial properties is lower than residential properties: If, as an applicant, you pledge a commercial property as collateral for a LAP, the LTV that is offered by banks will be lower than the LTV offered on residential properties. The reason behind this is that a residential property is considered to be less of a risk factor when contemplating a loan. Even though the property is kept as a security, banks are generally averse to having to take over a property in case of lack of repayment, to cover their dues. Similarly, a property that is self-occupied will also fetch a higher loan amount as compared to a property that has been rented out.
• Interest Rate: Comparing the interest rate of any loan should always be one of the first things that you check before applying for a loan and the loan against property EMI calculator helps you figure out how much your monthly payouts will vary based on the interest rate. Comparing the various deals that are available in the market will help you make an informed decision and choose the best offers. The interest rates that are offered by banks for an LAP generally lie in the range of 11 – 14%, which is much lower that the rates of interest that are offered on personal loans (12 – 24%), which are unsecured loans that banks consider to be a higher risk.
• Eligibility: It is also necessary that you check the eligibility criteria of the bank that you apply for a loan from, because when it comes to lending money, banks have some strict rules, and gettingyour loan application rejected can make it even tougher to get loans in the future. With the Paisabazaar loan against property Eligibility Calculator, you can input your detailsand get a list of LAP offers that are suitable to your requirement.
• Prepayment:There may be various charges that are applicable if an applicant chooses to prepay property loanssuch as LAP:
• Whether you apply online, or apply for the loan at a branch, if the loan applied for is charged a floating interest rate then there are no prepayment charges applicable on the loan principal amount.
• For loans with a fixed interest rate, the repayment facility can only be availed after a stipulated time period (generally 6 months) have passed after disbursement of the loan, after which a small percentage of the remaining principle amount (around 2%) is charged as a prepayment penalty.
• For loans with a fixed interest rate for which a stipulated time period (generally 5 years) has passed, no prepayment charges are applicable.
Therefore, prepayment of your loan without any penalties of charges is possible under the following key conditions:
• Your loan is at a floating rate of interest instead of a fixed rate
• A certain period of time has passed since the disbursement of your loan (in case of a fixed rate of interest LAP)
It is necessary to remember that the applied loan should be in the name of one or more individual borrowers. Loans that are taken in the name of business or corporate entities like firms, partnerships, AOPs or companies, do not qualify under in this category.
Features and Benefits of LAP
Before you apply for a loan, it is necessary to know the exact benefits of applying for this type of loan, as compared to other mortgage loans, some of which are listed below:
• The LAP is a secured loan. This means that it is offered only as a loan against residential property or a loan against commercial property, with the property offered as a security to the lender.
• When you apply for a LAP, you can borrow amounts of up to Rs. 1 Crore.
• The loan against property interest rates vary with each case and depend on the property type and various other factors.
• Multi-purpose: the loan can be availed for any purpose, including, for personal or professional need, marriage, property purchase, medical needs, education, or for business.
• Processing fee: Aratherlow loan processing fees of 1% of the loan amount is generally sanctioned. The loan against property EMI calculator does not take into account these charges.
• Tenure: These loans can be taken for loan tenure periods that can go up to 15 years or even more.
• Interest rates:loan against property interest rates are much lower as compared to otherloan options such as personal loan.
• Hassle free: Provided that other eligibility criteria are met, banks provide hassle free application processes for these loans.
• Repayment: There are a number of EMI options available to the borrowers, in order to allow them easy repayment.
• Upper limit: As long as the property meets the criteria, the applicant can avail loans of high amounts that can reach up to Rs. 10 crores and more.
• Type of Property: Regardless of the property being a commercial property, a residential property, or even an empty plot, the applicant can put it up as collateral for a LAP.
Eligibility for Loan against Property
To be eligible for loan against property, the requirements of banks are pretty liberal as the applicant’s property is kept as collateral. The loan tenure can also be taken for a medium to long tenure ranging from 5 years to 15 years. These criteria vary with each bank, but the basic requirements include:
• Applicant should be an Indian national
• The applicant must be at least 21 years old at the time they submit the loan application
• The applicant must have been employed by their current organization, or should have been involved in their current business for a number of years specified by the bank.
• The applicant should satisfy the minimum income requirement posed by the lender.
• If the applicant has a good credit history that shows a track record of timely EMI and credit card bill payments, they may benefit from reduced processing times and lower loan against property interest rates.
Documents Required for Loan against Property
In the following section, we will discuss the documents required for Loan against property application:
For Salaried Individuals:
• Identity and residence proof
• Past 3 months’ salary slips
• Past 6 months’ bank statements of the salary account
• Cheque for loan processing fees
For Self-employed Individuals:
• Identity and residence proof
• Proof of educational qualification
• Past 3 years’ IT Returns
• Past 6 months’ bank statements
For Working Professionals:
• Identity and residence proof
• Proof of educational qualification
• License/registration certificates
• Proof of business existence
• Business profile (detailed)
• Past 3 years’ profit and loss sheet and balance sheets
• Past 3 years’ IT Returns (self and company)
• Past 6 months’ bank statements
Interest Rates for Loan against Property
An individual who wishes to apply for a loan can choose LAP interest rates between:
• Fixed Interest Rate – This rate lies in the 11 – 15% per annum range and remains fixed throughout the loan tenure as they remain unaffected by the loan. This is most beneficial for those who are taking a long term loan.
• Floating Interest Rate – This type of rate is not fixed and will vary with the market conditions. This is most beneficial for short term loans.
The processing fee applicable on an LAP is kept low at about 1% of the total loan amount.