How to Calculate Your Loan Against Property Interest Rate

Loan against property or property loans are loans that individuals avail of by pledging a residential or commercial property they own as a collateral. Even after the borrower pledges a property they own as security, they can continue to inhabit it or earn rental income from it. Further, loans against property are low-interest rates and long-tenor loans, which makes their repayment quite easy. 

A high CIBIL score, high-quality collateral, a stable job and income, a low LTV ratio and a low debt-to-income ratio or FOIR are a few things that can help borrowers secure a low-interest rate loan against property, thereby making it further easier for them to secure a low rate of interest on their property loan. 

However, since these loans require borrowers to pledge a property they own as collateral, it is of utmost importance that borrowers avail of these loans only when they are financially prepared for the kind of commitment such loans demand. A loan against property interest rate calculator proves helpful here. 

What is a Loan Against Property Interest Rate Calculator? 

The loan against property interest rate calculator is an online tool that lets loan applicants calculate the total interest they will need to pay their lender if they decide to go for their desired combination of loan value and tenor. 

Loans against property interest rate calculators are also known as loans against property EMI calculators as these online tools allow loan applicants to also calculate their loan EMIs for the selected combination of the loan value and tenor they have in mind. 

These online tools are fairly easy to use and also free to use. They are available on almost every lender’s website, so finding one is never a problem. Here is how any loan applicant can use this calculator to calculate the loan EMIs they will need to pay each month.

1. The first thing that a loan borrower must enter into the loan against the property interest rate calculator is the loan amount they wish to borrow. Borrowers must always enter this loan amount after carefully assessing the current market value of their property as well as their income and repayment capacity.   
2. In the next section of the calculator, you will be required to enter the loan tenor you wish to opt for to complete loan repayment. A long tenor will make loan EMIs affordable and a short loan tenor will help you become debt-free quickly as well as enjoy a low cost of borrowing money. Ideally, you must try and go for a balance between feasible EMIs and the low cost of borrowing loans. 
3. Lastly, enter the property loan interest rate you are being offered. The interest rate is decided by the lender. However, building a strong credit profile and pledging high-quality collateral will help you secure low property loan interest rates.

Once you enter these details into the loan against the property interest rate calculator, the calculator will not only give you your loan EMIs but also tell you the total interest you will pay on the loan amount through the tenor and therefore, the total cost of borrowing money.   

Loan against property interest rate calculators can help loan applicants with repayment planning by sharing with them their loan EMIs even before they have initiated the loan application process. 

They also help loan borrowers easily try various combinations of the loan value and loan tenor to deduce a combination that delivers results that they find affordable or economical. The mortgage loan calculator also helps with prepayment planning and foreclosures.

Conclusion

In conclusion, a loan against property is a type of secured loan that can solve many of your financial problems, whether personal or professional. However, one must keep in mind that these loans require borrowers to pledge a property they own as security and if one fails to honour the EMI commitment they had made, the lender can sell the pledged collateral for the recovery of the funds owed. A loan against property interest rate calculator can help borrowers avoid mistakes related to their loan against property and future financial trouble. 

It is a handy tool and all loan applicants must make it a part of loan payment planning. However, one must keep in mind that while these calculators can help borrowers calculate loan EMIs and total interest outgo, they cannot help borrowers figure out their rate of interest. One of the easiest ways to know the loan against the property interest rate you are paying on your loan is to call your lender and request them to share the same with you.