11 MAY, 2022

A loan against property is a helpful solution for homeowners in times of need. But before you apply for a loan against property, it’s prudent to figure out your loan affordability by using a loan against property calculator. This calculator helps in the following ways:

  • Calculates your EMI

It’s recommended to use a loan against property calculator in the early stages of the loan process. This is because this tool helps you figure out how much your Equated Monthly Instalment (EMI) amount will be and how you can fit it in your budget. Your EMI is the way you pay back the loan as well as the interest on the loan over the tenure and hence using a loan against property EMI calculator will allow you to plan for repaying your debt. The advantage of using a loan against property EMI calculator is that you don’t need to manually calculate these important numbers and can instantly get your estimated EMI effortlessly.

  • Breaks down principal and interest components

Your loan against property EMI is made up of the principal you are repaying and the interest that you are charged. When you use a loan against property EMI calculator, you also get a loan amortization schedule which breaks down all your EMI payments and shows you your yearly opening balance, closing balance, interest payable, principal payable, etc. This gives you a clear picture of your debt obligation and how it will keep reducing over the tenure.

  • Reduces chances of loan rejection

When you use a loan against property calculator, you get to assess your loan eligibility and affordability. If the EMI amount is high compared to your income, it’s a cue for you to reduce your loan amount or increase your loan tenure. That’s because your loan eligibility depends primarily on your repayment capacity and hence you can lower the chance of rejection by being aware of your financial profile. In addition to reducing rejection chances, this also helps you not bite more than you can chew. Even if a lender were to approve a high loan amount with a high EMI, it may become stressful for you to meet your EMI payments. Hence, by using a loan against property calculator, you can ensure that you only apply for a loan amount that you can comfortably pay off.

The loan against property calculator uses three primary inputs – loan amount, interest rate, and loan tenure. You can check the current loan against property interest rates of the lender to input the interest rate in the calculator. However, it’s important to remember that the actual rate of interest as well as the amount of loan sanctioned would differ and the calculator only provides estimates. Even so, the EMI estimate is a good starting point that can allow you to have a sense of direction and clarity when you begin your loan application process.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.