A Mortgage Loan allows asset owners to borrow credit against their residential, commercial, or industrial property. They can pledge their property as collateral and get a loan against it. However, assessing the monthly installments is crucial before applying for a Loan Against Property, as it affects the monthly budget and repayment consistency.

A mortgage calculator estimates the monthly EMI based on three variables: loan amount, interest rate, and repayment term. Here, we will understand how each factor affects the loan EMIs.

Mortgage Amount: A higher mortgage amount results in bigger monthly EMIs. Therefore, although lending institutions approve loan amounts based on the property valuation, applicants must only borrow the required amount. Choosing a manageable loan amount prevents unnecessary financial burdens on the borrower’s monthly budget. 

Interest Rate: Mortgage loan rates vary based on the lender’s policy and the applicant’s financial condition, credit rating, and other factors. A higher interest rate results in bigger EMIs. Therefore, pick the lender carefully and ensure getting the lowest interest rates suitable to your repayment capacity.

Repayment Tenure: There is no perfect tenure for all Mortgage Loan applicants. Some people choose a longer term to keep EMIs smaller, while others prefer bigger EMIs to pay off the loan sooner. Picking a suitable loan tenure ensures that the borrowers do not default on the loan due to a financial crunch.

Thankfully, mortgage loans offer excellent flexibility during repayment, ranging from a few months to several years. Picking the correct loan term using a mortgage calculator ensures timely repayment and lowers any chance of loan default.

Also Read: 8 Situations in Which You Should Never Refinance Your Mortgage