Loan against property, also known as LAP, is a loan facility extended to a borrower who pledges a property to the financier to get a credit amount. The loan is secured as the property is held collateral in the bank. The advance extended depends on the value of the property being kept as security. All public and private sector banks, Non-banking financial corporations, credit societies provide the loan against property. The loan can be used for various purposes like revamping the business, extending the business activities, and for personal reasons as well.
A loan against a property calculator is an advanced tool created by financial institutions for the convenience of customers. The purpose of the tool is to simplify EMI calculation for the amount to be borrowed from the lender. It helps in better planning of finances and gives an estimate to the applicant about the loan amount he/she will be availing and the equated monthly installments to be paid every month. The EMI amount presented by the calculator includes the part of both interest and the principal amount. The interest in the initial phase of the loan tenure is more and then reduces gradually.
The LAP calculators available on the website of financial institutions are a great measure of knowing the intricacies of the loan.
Some of the benefits of the calculator are listed below:
The three main parameters that decide EMI calculations are discussed below:
Loan Amount: The loan amount relies on the estimation of property to be sold. Higher the credit against property sum, higher will be the EMI.
Rate of Interest: Rate of interest is the most common parameter which decides the EMI amount. Higher the ROI charged by the lender, the higher will be the installment to be paid every month. The interesting part is more in the initial years and recedes in the later segment.
Loan Tenure: The longest tenure for which the loan is available in 20 years, and it depends upon the age of the borrower. Longer the tenure, lesser will be the installment of the loan. The below table shows the EMI for a loan amount of 2 Lacs with different tenures in consideration. The rate of interest used for the calculation purpose is 8.70%.
EMI amount to be paid
Total amount(Interest + Principal)
Rs. 1.54 Lakh
Rs. 2.36 Lakh
Rs. 5.59 Lakh
Interest paid back to the lender
Rs. 1.36 Lakh
Rs. 4.59 Lakh
The EMI calculated is based on the following formula:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
EMI – Equated Monthly Instalment
P – Principal amount (the amount borrowed)
R – Applicable rate of interest (Interest as charged by the bank)
N – Loan tenure (In months)
The above formula is embedded in the calculator, and when the inputs are provided, it gives an EMI which is required to be paid by the borrower.
The documents required to process the loan against property are as follows:
Lenders are cautious about the existing loans and will ask about the repayment status of the loan and might also require a document from the previous lender. But if there is no issue in the repayment of the loan, then there will be no issues in getting the LAP.
The credit score is required to check the creditworthiness of the borrower; however, with a loan against property, the processing can be done even with a bad credit score. As the person is giving the security of property, there is not much risk. Please note that the rate of interest will be higher in that case.
The calculator gives a correct EMI amount and is highly reliable.
The calculator is quite simple to use. You will behave to put the inputs as requires, and the calculator will present the EMI after execution.
The online calculator is available on many online portals. You can visit the official website of the lender to access the calculator.