Budgeting Wisely: Unravelling the Mortgage Loan EMI Calculator

A mortgage loan EMI calculator is an online tool which determines the payments required to cover repayments on a mortgage loan. It is based on information such as loan amount, interest rate, and loan tenor, which ensure the accuracy of results obtained by this calculator. 

What is a mortgage loan or loan against property? 

Secured loans like loans against property (LAP) or mortgage loans are those which are sanctioned against commercial or residential properties which are owned by a borrower. This property acts as collateral to the lender or financial institution and is retained by it until the loan is fully paid. 

Mortgage loans are available to both salaried persons and non-salaried employees. The borrower of an LAP may utilise the funds to cover numerous issues such as starting up a business or acquisition, settling medical bills, wedding expenses, and education, among others. The amount borrowed is repaid in small instalments over time which takes off any pressure from a borrower. 

What is mortgage loan EMI?

An Equated Monthly Instalment (EMI) is a recurring monthly payment calculated as principal plus interest and paid till the end of the loan tenor. While a mortgage loan’s EMI remains constant, its principal and interest component changes over time. The bulk of interest payment is made during the initial years of this tenor. 

Pre-knowledge of EMI enables an individual to borrow a certain sum depending on his/her financial position. The interest rates also play an important role in determining the repayment amount for a loan against property. This occurs at a varying rate for each financial institution. 

How can someone calculate EMI for a property loan? 

Anyone who wants to borrow money by pledging a property should be aware of the amount they have to pay every month. This will assist them in budgeting for their finances suitably so that they can make partial payments as often as possible. Here is the formula to calculate property loan EMI:

EMI = P x R x (1 + R)^N / (1+R)^N – 1

In this formula, P is the principal amount, R is the interest rate, and N is the loan tenor.

Nevertheless, people can use a mortgage loan EMI calculator on a lender’s website to calculate monthly payments in a much easier and faster manner. 

What are the benefits of using a mortgage loan EMI calculator? 

These are some of the major benefits of using a loan against property EMI calculator:

• It is a quick and convenient online tool that helps a borrower avoid wasting time on manual computations.
• The calculator operates via an algorithm; this means you don’t have to worry about manual errors.
• It can be used whenever you need to make calculations at no cost, and it allows for computation without additional fees.
• When a borrower plans for his/her EMI beforehand, they can use the calculator to compare and select the most affordable options available in the market. 

What are the factors affecting mortgage loan EMI calculation? 

The 3 important factors that help to decide the EMIs are:

• Principal amount: The loan against property amount taken from a lending institution is dependent on the value of the property mortgaged. As the loan amount increases, so does the EMI.

• Tenor: The mortgage loan repayment period is based on how old a borrower currently is, as well as his or her anticipated age at retirement. The smaller the EMIs, the longer the loan tenor.

• Rate of interest: The most important determinant of whether a loan is easily payable, and how long the repayment tenor should last is the rate of interest charged by one’s lender. Having a higher interest rate will limit an individual’s ability to take a more significant loan amount. Conversely, a lower interest rate enables more money borrowed and makes payments easier.

Besides these parameters, borrowers should know that many lenders provide pre-approved loans to select customers. These offers are available on home loans, loans against property, etc., and help to fast-track the property loan application process. One may check their eligibility for pre-approved offers on a lender’s website. 

Hence, whenever someone is applying for a mortgage loan, he/she should calculate the EMIs first. Calculating the EMI enables borrowers to plan financially by knowing how much EMI he/she would pay per month. The mortgage loan EMI calculator helps people in doing this effortlessly.