Steps to Avail Of a Loan Against Property
A loan against property or mortgage loan is a secured loan sanctioned against both commercial and residential properties owned by applicants. The lender keeps this property as collateral until the loan is paid in full.
The loan can be repaid over a decided period of tenor in equated monthly installments (EMI). The borrowers can determine the best loan against property deal for them with the help of EMI calculators available on official websites of financial organizations.
One of the major benefits of this type of loan is the fact that the ownership of the property pledged as collateral remains with the borrower. Further, since a loan against property is a secured loan, the interest rate on these loans is quite low.
If you are planning to avail of a loan against property, here are the steps to follow:
Search for Best Loan Against Property Interest Rates
First and foremost, talk to different lenders and see what interest rate each lender is offering. The interest rate offered is dependent on various factors, including the quality of property kept as security, tenor of the loan, and the amount borrowed.
Loan amount is given on the basis of the collateral property and its market value.
In general, lenders offer loans equal to 75% of the property’s market value. Before applying for a loan against property with any particular lender, talk to different lenders and see what interest rate each lender is offering you. In the end, go with the one offering the lowest interest rate as loans against property are long-term loans and even a decimal point decrease in interest rates can help you save a lot in the long run.
Understand Your Chosen Lender’s Eligibility Criteria
Before applying for a selected loan scheme, it is vital to check for the eligibility criteria since it varies from lenders to lenders.
In general, most lenders require applicants to be Indian citizens, at least 25 years of age, with a stable source of income. Lenders also require applicants to have a credit score of 750 and above. Understanding the eligibility criteria is important. If you do not meet your chosen lender’s eligibility criteria, make sure to work on your profile before applying to reduce your chances of getting rejected.
For speedy approval of your loan application, thoroughly go through the eligibility criteria stated by the lenders and keep the required documents, such as proof of identity, proof of income and the property papers, ready with you.
EMI Calculator
With a variety of schemes available in the market by various financial institutions, it is essential to select the one best suited for your requirements, based on loan tenor, rate of interest and principal.
In some cases, longer tenors are suggested, which ensures lower EMI but higher interest payment in the longer run. In other cases, shorter tenors are advised for lower interest outgo in the long run, based on individual’s affordability.
If you are confused regarding what tenor and amount to choose, use an EMI calculator to understand how much you can borrow and pay off easily, based on your income and affordability.
Application Process for Loan Against Property
The final step is to apply for the selected loan plan. Remember that often the lenders create clauses and sub-clauses in the document to rope in the candidate for their own benefits. Hence, go through all the agreements and documents before signing the dotted line.
Make sure to look for details, such as repayment options and additional costs, such as processing, documentation, and pre-payment charges, if any, before signing on the dotted line.
