Key Things To Remember Before Opting For Loan Against Property

Acquiring a loan against property can be highly beneficial to meet a number of financial needs. This secured loan is an affordable alternative whereby individuals can mortgage their property to access a substantial amount at a competitive interest rate. However, one should consider a few factors before opting for a loan against property to make a knowledgeable decision.

Factors to consider before opting for a loan against property

Illustrated below are some factors that individuals should consider before selecting a loan against property:

• Applied interest rate

The interest rate levied on a loan against property will differ on various factors, including tenor, loan amount, credit history etc., and it can alter from one financier to another. Therefore, when applying for such a mortgage loan, one should ensure availing the most affordable rates to keep the debt manageable. Consequently, one must research and compare current loan against property interest rates and settle for the one that meets your budget.

Also, a loan against property balance transfer can help applicants to avail of affordable interest rates with a new lender.

• Loan repayment tenor

Since LAP is a high value credit option, lenders offer a longer repayment tenor. However, choosing a longer tenor will reduce the EMIs and vice-versa. In this scenario, borrowers can take help of a loan against property EMI calculator to find out the exact EMIs, interest outgo, and the overall borrowing cost to manage the finances effectively in the long run.

• Loan quantum

In the case of a loan against property, the sanctioned amount depends upon the property’s market value. However, location, age, and condition influence the loan amount. Usually, an individual can obtain around 75–80% of the property’s current market value as a loan.

• Tax benefits

Several loan against property tax benefits are available as per India’s income tax laws, which individuals can claim. However, they can only apply if they can show that they are using these funds to meet a specific set of requirements.

In addition, there are several types of loan against property. As per 24B, interest exemptions are available on every sub-type of LAP.

To conclude, a loan against property can be a viable credit option for borrowers. Moreover, applicants can keep these above-mentioned pointers in mind to avail of the required loan amount.

Read Also: Factors You Must Know About Loan Against Property