Loan against property EMI Sep 2020

• Loan amount – Loan against property loan amount depends upon the value of property to be mortgaged. Higher the loan against property amount, higher will be the EMI.
• Rate of interest – Interest amount to be paid is generally high in the initial years and as the tenure comes to an end, interest component reduces and principal component increases. Lower the Loan against property interest rate, lower will be the EMI.
• Loan Tenure – Longest loan tenure available for mortgage loan in India is 20 years, subject to borrower’s current age and retirement age. Following table provides a comparison of EMI for a ₹ 1 lakh loan at different tenures:
  

  	5 years	10 years	20 years
  EMI for a loan amount ₹ 1 lakh at 7.75%	₹ 2,016	₹ 1,200	₹ 821
  Total amount you pay back to the bank including principal and interest	₹ 1.47 Lakh	₹ 2.15 Lakh	₹ 4.64 Lakh
  Interest you have to pay over loan tenure	₹ 46,784	₹ 1.15 Lakh	₹ 3.64 Lakh
• At the lowest Loan against property rate of 7.75% the lowest EMI for maximum tenure of 20 years is ₹ 821 per lakh. In this case, you have to pay an interest of ₹ 3.64 Lakh on your loan amount of ₹ 1 lakh over a period of 20 years
• If you decide to take a loan for 5 years only, for the same rate of interest you will pay a higher EMI ₹ 2,016 . In this scenario you pay a total interest of ₹ 46,784 on your loan amount of ₹ 1 lakh over a period of 5 years, which is less than half of what you paid for a 20 years loan.

An amortization schedule is a table of periodic loan payments that shows the amount of principal and the amount of interest that comprise each payment until the loan is paid off at the end of its term.

In the Amortization schedule, your Loan Against Property monthly EMI will be equal, but the component of EMI, which consists of interest payment and principal payment will not remain the same every month, it keeps on changing.

Illustration: How to read an amortization schedule

Suppose if you take a Loan Against Property of ₹ 10 Lakh for 5 years at an interest rate of 7.75%. EMI calculated for this loan amount is ₹ 20,157 and the total annual EMIs to be paid annually is ₹ 2,41,884. The EMI schedule of loan for 5 years is explained below in the table –

Amortization Schedule for a Loan Against Property of ₹ 10 Lakh over the 5 years

Year	Interest paid during the year	Principal repaid during the year	Total amount paid during the year (Interest + Principal)	Outstanding Principal
2020	₹ 25,300	₹ 55,328	₹ 80,628	₹ 9,44,672
Sep	₹ 6,458	₹ 13,699	₹ 20,157	₹ 9,86,301
Oct	₹ 6,370	₹ 13,787	₹ 20,157	₹ 9,72,514
Nov	₹ 6,281	₹ 13,876	₹ 20,157	₹ 9,58,638
Dec	₹ 6,191	₹ 13,966	₹ 20,157	₹ 9,44,672
2021	₹ 67,090	₹ 1,74,794	₹ 2,41,884	₹ 7,69,879
Jan	₹ 6,101	₹ 14,056	₹ 20,157	₹ 9,30,616
Feb	₹ 6,010	₹ 14,147	₹ 20,157	₹ 9,16,470
Mar	₹ 5,919	₹ 14,238	₹ 20,157	₹ 9,02,232
Apr	₹ 5,827	₹ 14,330	₹ 20,157	₹ 8,87,902
May	₹ 5,734	₹ 14,423	₹ 20,157	₹ 8,73,479
Jun	₹ 5,641	₹ 14,516	₹ 20,157	₹ 8,58,963
Jul	₹ 5,547	₹ 14,609	₹ 20,157	₹ 8,44,354
Aug	₹ 5,453	₹ 14,704	₹ 20,157	₹ 8,29,650
Sep	₹ 5,358	₹ 14,799	₹ 20,157	₹ 8,14,851
Oct	₹ 5,263	₹ 14,894	₹ 20,157	₹ 7,99,957
Nov	₹ 5,166	₹ 14,991	₹ 20,157	₹ 7,84,966
Dec	₹ 5,070	₹ 15,087	₹ 20,157	₹ 7,69,879
2022	₹ 53,052	₹ 1,88,832	₹ 2,41,884	₹ 5,81,047
Jan	₹ 4,972	₹ 15,185	₹ 20,157	₹ 7,54,694
Feb	₹ 4,874	₹ 15,283	₹ 20,157	₹ 7,39,411
Mar	₹ 4,775	₹ 15,382	₹ 20,157	₹ 7,24,029
Apr	₹ 4,676	₹ 15,481	₹ 20,157	₹ 7,08,548
May	₹ 4,576	₹ 15,581	₹ 20,157	₹ 6,92,968
Jun	₹ 4,475	₹ 15,682	₹ 20,157	₹ 6,77,286
Jul	₹ 4,374	₹ 15,783	₹ 20,157	₹ 6,61,503
Aug	₹ 4,272	₹ 15,885	₹ 20,157	₹ 6,45,618
Sep	₹ 4,170	₹ 15,987	₹ 20,157	₹ 6,29,631
Oct	₹ 4,066	₹ 16,091	₹ 20,157	₹ 6,13,541
Nov	₹ 3,962	₹ 16,195	₹ 20,157	₹ 5,97,346
Dec	₹ 3,858	₹ 16,299	₹ 20,157	₹ 5,81,047
2023	₹ 37,886	₹ 2,03,997	₹ 2,41,884	₹ 3,77,049
Jan	₹ 3,753	₹ 16,404	₹ 20,157	₹ 5,64,643
Feb	₹ 3,647	₹ 16,510	₹ 20,157	₹ 5,48,132
Mar	₹ 3,540	₹ 16,617	₹ 20,157	₹ 5,31,515
Apr	₹ 3,433	₹ 16,724	₹ 20,157	₹ 5,14,791
May	₹ 3,325	₹ 16,832	₹ 20,157	₹ 4,97,959
Jun	₹ 3,216	₹ 16,941	₹ 20,157	₹ 4,81,018
Jul	₹ 3,107	₹ 17,050	₹ 20,157	₹ 4,63,967
Aug	₹ 2,996	₹ 17,161	₹ 20,157	₹ 4,46,807
Sep	₹ 2,886	₹ 17,271	₹ 20,157	₹ 4,29,536
Oct	₹ 2,774	₹ 17,383	₹ 20,157	₹ 4,12,153
Nov	₹ 2,662	₹ 17,495	₹ 20,157	₹ 3,94,658
Dec	₹ 2,549	₹ 17,608	₹ 20,157	₹ 3,77,049
2024	₹ 21,502	₹ 2,20,381	₹ 2,41,884	₹ 1,56,668
Jan	₹ 2,435	₹ 17,722	₹ 20,157	₹ 3,59,328
Feb	₹ 2,321	₹ 17,836	₹ 20,157	₹ 3,41,491
Mar	₹ 2,205	₹ 17,951	₹ 20,157	₹ 3,23,540
Apr	₹ 2,090	₹ 18,067	₹ 20,157	₹ 3,05,472
May	₹ 1,973	₹ 18,184	₹ 20,157	₹ 2,87,288
Jun	₹ 1,855	₹ 18,302	₹ 20,157	₹ 2,68,987
Jul	₹ 1,737	₹ 18,420	₹ 20,157	₹ 2,50,567
Aug	₹ 1,618	₹ 18,539	₹ 20,157	₹ 2,32,028
Sep	₹ 1,499	₹ 18,658	₹ 20,157	₹ 2,13,370
Oct	₹ 1,378	₹ 18,779	₹ 20,157	₹ 1,94,591
Nov	₹ 1,257	₹ 18,900	₹ 20,157	₹ 1,75,691
Dec	₹ 1,135	₹ 19,022	₹ 20,157	₹ 1,56,668
2025	₹ 4,587	₹ 1,56,668	₹ 1,61,256	-₹ 0
Jan	₹ 1,012	₹ 19,145	₹ 20,157	₹ 1,37,523
Feb	₹ 888	₹ 19,269	₹ 20,157	₹ 1,18,254
Mar	₹ 764	₹ 19,393	₹ 20,157	₹ 98,861
Apr	₹ 638	₹ 19,518	₹ 20,157	₹ 79,343
May	₹ 512	₹ 19,645	₹ 20,157	₹ 59,698
Jun	₹ 386	₹ 19,771	₹ 20,157	₹ 39,927
Jul	₹ 258	₹ 19,899	₹ 20,157	₹ 20,028
Aug	₹ 129	₹ 20,028	₹ 20,157	-₹ 0

Each Loan Against Property EMI consists of both amounts of interest as well as the principal repaid. The interest component of EMI goes down while the principal component goes up in both cases while doing the calculation.

In the above illustration, on a Loan Against Property of ₹ 10 Lakh, taken at the lowest interest rate of 7.75%, EMI paid is ₹ 20,157 and an annual total of EMIs is ₹ 2,41,884, the interest component is ₹ 71,533 while the principal component is ₹ 1,70,350 in year 1 of loan disbursement. You repay only 17.04% of the total principal after paying 12 EMIs during the first year.

In year 5, the interest component of EMI is around 4.07%, while the principal component is around 95.93%. Upto 5 years, you have cumulatively repaid 100% of your total Loan Against Property.

It becomes difficult to calculate your loan EMIs manually as the process is time taking and difficult. If you want to calculate your EMI you only need to enter your loan amount, interest rate to be charged and tenure of loan. The formula used by mortgage loan calculator is:

P*r* (1+r)^n/([(1+r)^n]-1)
In above formula, P is the loan amount that you want to borrow
r is the rate of interest per month
n is the tenure of loan repayment in months
It is advised to use mortgage loan calculator as it is very easy and time saving process and helps you in calculating your EMI in seconds.

Mortgage loan EMI calculator has multiple benefits, which are listed below -

• Saves your time : You can easily calculate your EMIs immediately through mortgage loan EMI calculator which can save your time. You are required to input basic details like loan amount, interest rate and tenure to get the detailed schedule.
• Give accurate results : If you are doing manual calculations then there are higher chances of getting wrong results which can change your Mortgage loan EMI and this can delay your decision while taking loan against property. Hence, you are advised to use online EMI calculator for LAP to get correct results.
• Plan your finances : Loan against property calculator calculates your EMI and shows how much EMI amount is to be paid to the bank. Always opt for EMI that falls within your budget and reduces any potential distress on your finances in the future.
• Allows to evaluate multiple schedules : By mortgage loan EMI calculator, you can also check amortization schedule and EMIs for various combinations of loan tenures and interest rates and accordingly choose the EMIs that suit your repayment or servicing capabilities.

Part prepayment is a huge amount that you pay before the due date of your EMI when you have surplus money with yourself. When you part prepay your loan, bank gives you two options:

• To reduce your EMI and keep the tenure same.
• To keep the EMI same and reduce your repayment tenure.

The choice between the two options is a function of your repayment capacity on a monthly basis. We have explained the way EMI or tenure re-adjust after part pre-payment of property loan in the illustration below:

Suppose you take a loan of ₹ 10 Lakh for 5 years at an interest rate of 8.50%. Your EMI of the loan is ₹ 20,516 per month and annual total of EMI is ₹ 2.46 Lakh. This is how your original loan schedule looks like till Year 3. On loan amount of ₹ 10 Lakh, you make payment of ₹ 20,516 every month and annual payment of ₹ 2.46 Lakh. By the end of year 3, you have outstanding principal of ₹ 4.51 Lakh and you have to pay another 24 EMIs to fully pay down your loan. The original schedule of your loan till year 3, has been shown in the table below:

Loan Amount	₹ 10 Lakh
Tenure (in months)	60
Interest Rate	8.50%
Monthly EMI, ₹	20,516

Loan schedule	Principal repaid	Principal outstanding
Year 1	1.68 Lakh	8.32 Lakh
Year 2	1.82 Lakh	6.50 Lakh
Year 3	1.99 Lakh	4.51 Lakh

Now at the end of year 3, you have surplus amount of ₹ 2 Lakh and you decide to prepay the loan. You have two options:

Option 1: Reduce your loan tenure and keep your EMI same

Option 2: Reduce your EMIs and keep the loan tenure unchanged

Option 1: Reduce your loan tenure and keep your EMI same

If you have ₹ 2 Lakh as surplus amount and decide to keep the EMI same and reduce the tenure, this is what will happen. At the end of 3 years, when you prepay an amount of ₹ 2 Lakh outstanding principal is reduced to ₹ 2.51 Lakh as comparison to ₹ 451,209 in your original schedule. As your loan outstanding reduces and you opt to reduce your loan tenure, at the end of 3 years you will pay only 49 EMIs compared to total 60 EMIs as planned in your original loan schedule. This means your loan tenure stands reduced by 11 months. Please refer to table below to understand the EMI calculations in case of a prepayment:

Loan Amount	₹ 10 Lakh
Tenure (in months)	49
Interest Rate	8.50%
Monthly EMI, ₹	20,516
Early Payment, ₹	2 Lakh in 3rd year

Loan schedule	Principal repaid	Principal outstanding
Year 1	1.68 Lakh	8.32 Lakh
Year 2	1.82 Lakh	6.50 Lakh
Year 3	3.99 Lakh	2.51 Lakh

Option – 2 : Reduce your EMI and keep the loan tenure same

At the end of 3 years, when you prepay an amount of ₹ 2 Lakh outstanding principal is reduced to ₹ 2.51 Lakh as comparison to ₹ 4.51 Lakh in your original schedule. As your loan outstanding reduces and you opt to reduce EMI, your revised EMI stands at ₹ 11,418 compared to ₹ 20,516 earlier. Your remaining loan tenure remains unchanged at 24 months and you pay an EMI of ₹ 11,418 which is lower by ₹ 9,098 of your original loan amortization schedule. Please refer to table below to understand the EMI calculations in case of a prepayment under Option 2:

Loan Amount	₹ 10 Lakh
Tenure (in months)	60
Interest Rate	8.50%
Monthly EMI, ₹	20,516
Early Payment, ₹	2 Lakh in 3rd year

Loan schedule	Monthly EMI	Principal repaid	Principal outstanding
Year 1	20,516	167,629	832,226
Year 2	20,516	182,445	649,781
Year 3	20,516	398,572	251,209
Year 4	11,418	120,288	130,920

If you choose option 2 i.e. reduce your EMI then you can avail certain benefits like your monthly EMI amount will reduce then you can spend more over your standard of living and over day to day expenses. As your EMI reduces you pay lower interest in comparison to the original loan schedule. If you plan to prepay and continue paying same EMI over a shorter tenure can result in significantly lower interest amount on your Loan against property and hence, should be the preferred choice whenever possible.

✅What is Loan Against Property EMI?

Loan against property EMI is a fixed amount you pay towards repayment of your loan every month till the loan is fully paid back. While the EMI amounts stay constant, each month the interest component keeps coming down and the principal keeps going up, except when interest rate increases. Loan against property tenure in India ranges from 5 years to as high as 18 years. Longer the tenure, lower the EMI. For accurate EMI calculation, it is best to use a mortgage calculator.

✅How to use a Mortgage calculator?

Mortgage loan EMI Calculator uses a combination of the loan amount, loan tenure and interest rate to calculate loan EMI instantly.

✅How principal and interest split in EMI?

Loan against property EMI comprises two components, such as principal and interest rates. The interest component is higher in the initial years and reduces over the years. When you pay an EMI, all the interest is first paid, and the remaining amount is considered as principal. Every month the interest is calculated on outstanding amount.
Suppose you have taken ₹ 1 Lakh loan for 12 months at 12% rate. The EMI for the loan will be ₹ 8,885.
Interest component in 1st EMI = (12/12*100)*1,00,000 = ₹ 1000
Principal component in 1st EMI = 8,885 – 1,000 = 7,885
In the next EMI, the interest amount will be calculated on an outstanding principal of 1,00,000 – 7,885 = ₹ 92,115. By the end of the tenure, the interest component will come down to zero and the amount you pay as EMI is the remaining principal. This is how interest and principal split in EMI.
Use a mortgage calculator to get the complete schedule of your EMIs along with principal and interest component in it.

✅What is the maximum tenure for which I can get a property loan?

Usually, banks offer Property loan for a maximum period of 20 years. But loan tenure can be extended up to 25 years, under special schemes of a few banks. If you apply for a longer repayment tenure, your EMI for Property loan will be less. However, longer loan tenure increases the number of interest payments to be paid on loan.

✅If you have availed a Loan against Property at a floating rate of interest then how will an increase in the rate of interest impact?

In order to avoid the burden of higher EMI payment, banks will first attempt to increase the tenure of the loan subject to permissible limits. If the increase in tenure is not enough to cover the total amount with interest, then the bank will increase your EMI amount. To reduce your EMI, we recommend making a part prepayment at your bank.