You may come across unforeseen expenses anytime in the future and these exorbitant expenses can be a hassle if your savings are not enough to fulfil your requirements. In such a scenario, a loan against property is the best possible way to tackle these expenses.
A loan against property is a secured loan wherein the borrower pledges their residential or commercial property with a bank or an NBFC as collateral to secure a large sum of financing with affordable low-interest rates and long-term tenors.
Unlike other forms of unsecured loans where the lender will want a plethora of documents for verification, this is not the case for a loan against the property because the loan amount is secured, which makes the bank less hesitant to approve these loans as the lender’s risk factor is on the lower side.
What is a loan against property EMI Calculator?
A loan against property EMI calculator is an online tool that helps calculate your monthly instalments (EMIs), interest payable and the total cost of the loan as well. A loan against property EMI calculator is important because doing these calculations manually may cause errors and give you inaccurate results, which can lead to a financial blunder. It is beneficial to use an EMI calculator because it will not only provide you with the utmost accuracy but also help you save an ample amount of time and you can make changes to the figures to establish your financial capability.
Here is how you can use a loan against property EMI calculator:
Step 1: Visit any of the loan against-property EMI calculators available online.
Step 2: Enter the loan amount you wish to borrow
Step 3: Enter the tenor period you are comfortable with
Step 4: Enter the rate of interest you have been offered
Step 5: Upon clicking on ‘Submit’ your monthly instalment, the total interest payable and the principal loan amount will be displayed on the screen.
What are the benefits of a loan against property EMI calculator?
- A loan against property EMI calculator provides you with fast and accurate calculations.
- An online tool will remove any chances of manual human errors as these calculators are based on an algorithm.
- An online loan against property EMI calculator is free of cost and you can use it as many times as you need without paying any fees.
- You are able to compare multiple different offers you have received from lenders.
It is important that you approach multiple different lenders to receive the best offer you can for your property. Every lender has its own lending terms and each lender’s interest rates, tenor periods, and loan sanction differ; hence, you must approach multiple lenders and make an informed decision to get the best value for your money.
What are the benefits of a loan against property?
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High-Value:
A loan against property is secured by pledging your property as collateral, and after the lender will inspect your property to establish the loan-to-value ratio against your property’s current market value. Usually, lenders will sanction up to 70–80% of your property’s current market value. No other unsecured loan will offer you such a high payout.
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Property Usage:
One of the most beneficial features of a loan against property is that even when you mortgage your property, you don’t lose ownership. You may continue to enjoy the benefits of your property by residing in it or even renting it out. You can pledge your commercial or residential property, and some lenders will even accept land plots as collateral.
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Low-Interest Rates:
Since a loan against property is a secured loan, the lender’s risk factor is reduced and if the borrower is unable to repay their loan or continuously defaults on their monthly instalments, the lender is well within their right to liquidate the asset to recover their losses. This type of security gives lenders the confidence to approve loans against property at low-interest rates. Several factors determine the interest rates offered to you so it is in your best interest to fulfil as many eligibility criteria as possible.
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Lon Term Tenors:
A loan against property is a long, high-value loan, which makes it a long-term obligation. Repaying a loan over 20 years or more will help you with the affordability of the loan as the monthly instalments will be lower but the interest paid will be on the higher side. A loan against property repayment terms is dictated by your loan application profile, so if you can repay a higher EMI, you can opt for a shorter loan tenor to save on interest.
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End Use:
The most beneficial feature of a loan secured by the property is that the funds you receive do not have any end-use restrictions. You may use the funds to tackle any expenses that you may have, such as debt consolidation, business expansion, property renovation, travel expenses, higher education abroad, or even wedding expenses.
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Tax Benefits:
Borrowers usually lean towards other forms of loans, such as home loans, because of the multiple tax benefits you can receive, but there are specific tax benefits you can claim from a property loan depending on the usage of the funds. For example,
- Under section 37 (1) of the Income Tax Act, 1961, you are allowed to claim tax deductions if you use the loan against property for your business expenses. You can claim the interest paid as a business expense.
- Under section 24 (B) of the Income Tax Act, 1961, you can claim a tax deduction if you use the loan against property for the purpose of purchasing a residential property. The maximum deduction you can claim is Rs. 2 lakhs.