Interest rate calculation of loan against property is relatively straightforward. As an example, a borrower may apply for Rs 50 lakh of loan for 15 years with 12.25 percent interest rate. The EMI would be Rs 60,650, which is consisted of principal components at Rs. 50958 and interest at Rs. 9792. Consequently, the outstanding balance for the second month will be Rs. 49,88,208.
Although the actual interest rate charged by your bank may vary, we can still calculate the monthly interest amount by multiplying rate of interest, outstanding loan balance and number of days in the year. If borrowers apply a loan with floating rate, the actual interest rate could be linked to the bank’s base rate to simplify the calculation.