Comprehensive Guide to Property Loans: Everything you Need to Know
In today’s fast-paced world, property loans are gaining immense popularity. A property loan is the ultimate funding solution for arranging funds to meet various expenses. Because this loan type is secured, the rates of interest and other additional charges are low when compared with any unsecured loan. This blog provides a detailed overview of property loans including its features and benefits, eligibility criteria and other relevant considerations.
Understanding property loans
A property loan, commonly referred to as a loan against property, is a secured loan that individuals take pledging land as collateral. This loan is ideal for carrying out large expenses that include expansion of business, home renovations, purchasing equipment and more.
This loan is beneficial for individuals in search of financial stability and consolidation of debts into a single loan. Considering the market value of the property, the loan amount is decided. If a borrower however fails to repay the loan amount, the lender can auction the property and recover the loan amount. Thus, borrowers should borrow only the required amount.
Features and benefits of property loans
Some features and benefits of property loans are the following:
- Low rates of interest: A loan against property comes with an affordable rate of interest compared to any unsecured loan type.
- Loan amount: Borrowers can access loan amounts as high as Rs.5 crore based on the mortgaged property.
- Loan tenor: Borrowers are eligible to repay the loan amount with a tenor of up to 17 years.
- Loan disbursal: After verification of submitted documents, the loan amount is disbursed into the account within 72 hours of approval
Eligibility criteria of property loans
Property loan eligibility is easy to meet. The eligibility criteria are mentioned in detail:
- Age: Borrowers opting for a property loan must lie within an age range between 28 to 60 years.
- Nationality: Applicant must be an Indian holding property in the city where the financial institution operates.
- CIBIL score: To get an approved property loan, it is mandatory to maintain a CIBIL score of 700 or higher.
- Occupation: Self–employed professionals and non-professionals are eligible for property loans
Property loan EMI calculator
A property loan calculator is an easy-to-access online tool that helps individual borrowers check out the loan amount to be repaid each month. Entering the employment type, monthly income and property value reflects the loan amount.
Thus, proper use of this calculator online saves a lot of time and effort. Individual borrowers can also reach an informed decision making choosing the proper loan amount and tenor to meet their financial goals.
Calculating EMI of property loan
To calculate the EMI amount for a property loan, make sure of the following formula:
P*r(1+r)^n/([(1+r)^n]-1)
Where P stands for the principal amount to be borrowed
R denotes the rate of interest applicable on the loan amount each month
N is the loan tenor (calculated in months)
Several reputed financial institutions provide pre-approved offers to existing customers. These are available on various products such as a home loan and loan against property that speeds up a credit application process. Alongside, interested individuals can check their pre-approved offers from the official website by entering their name and relevant contact details.
To conclude, the majority of individual borrowers opt for property loans because of their low interest rates. Considering all the factors, a property loan allows individuals to raise money for financing any big expense. The only disadvantage is its inability to repayment that might cause the financial institution to take possession of the property. Thus, it is essential to plan finances accurately beforehand to ensure the loan is repaid on time.
