How to Use a Mortgage Calculator to Estimate Your Monthly Payment

mortgage loan calculator

Mortgage loans continue to be a popular source of secured funding owing to their reduced lending rates. At the same time, loan defaults are on the rise as well. The TransUnion CIBIL reported the percentage of loan against property overdue for over 90 days to be 3.96% as of August 2020. This included a 0.34% rise compared to delinquency rates in the preceding year.

A primary cause of the dip in timely repayment is inefficient financial planning. This is where a house mortgage loan calculator can be a great help. Read on to know about its usage and how it can aid in better loan management.

mortgage loan calculator

Mortgage loans have for long served as a critical source of high-value financing for many individuals. Mortgage loans are long-term credits with repayment tenor extending up to 20 years or more. Various financial institutions bring mortgage loan calculators which help borrowers to make such decisions efficiently. These calculators allow you to not only estimate the EMIs but also other essential values that can have an impact on your finances in the long run.

What is a mortgage loan?

Financial institutions extend secured funds against immovable assets such as lands and houses. These are called mortgage loans and can be availed against residential and commercial properties. Among the various types of mortgage loans, a loan against property comes as the most convenient option for most borrowers due to the financial product’s flexible usability.

Leading NBFCs provide an online house mortgage loan calculator on their website to help borrowers avail an estimate of their monthly EMIs in advance. If you aren’t familiar with using one, here is a detailed guide.

How to use a mortgage calculator?

Individuals can determine their monthly payments using a loan against property EMI calculator in the following steps:

Step 1: Visit your lender’s official website and navigate to their online loan calculator page.

Step 2: Select the inputs for your required loan amount, repayment tenor, and interest rate.

Step 3: Get instant results detailing the total payment breakdown and monthly EMIs. This tool also serves as a mortgage loan interest rate calculator since you can also view your total payable interest separately.

Individuals can keep adjusting their inputs until they reach a viable repayment amount.

How does a house mortgage loan calculator work?

To master the 5 ways to effectively repay your existing loan, you need to know how the EMI calculator inputs affect your loan repayment.

Mathematically, the formula to calculate total mortgage loan payable (M) is given as:

M = {P (1+i)n} / {(1+i)n – 1}

Where ‘P’ indicates the total borrowed amount, ‘I’ stands for rate of interest per month, and ‘n’ indicates the total tenor in months.

It is easily understandable from the formula that with an increasing principal, interest rate, and tenor, the total repayment also increases.

Benefits of using a loan against property calculator

The following is a list of advantages of using a LAP loan calculator.

  • Speed and accuracy: Manually calculating the total mortgage loan payment using the mentioned formula can be time-consuming and can lead to errors. Online calculators, on the other hand, provide accurate results within a few seconds.
  • Easy availability: Nowadays, most lending institutions provide online EMI calculators on their website, which loan-seekers can use free of cost.
  • Effective financial planning: Using an EMI calculator can ease how to determine the ideal tenor of your loan against property. Opting for a shorter tenor may lead to higher EMI amounts but will aid in greater property loan interest rate savings in the long run.
  • Quick comparison: These calculators also help borrowers compare mortgage loan interest rates and available suitable tenors from different lenders quickly.
mortgage loan calculator

Leading NBFCs also extend pre-approved offers against financial products, such as loans against property and home loans, to streamline the application process. Always check your pre-approved loan offer with your name and contact number before applying.

Using a mortgage loan interest rate calculator to avail the benefits mentioned above can help individuals exercise greater control over their EMI repayments. You can borrow according to your repayment capacity and plan monthly payments effectively, reducing default risk. Also, do not forget to check for available tax deductions on interest payments for greater savings.

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