Things to remember while availing LAP

A loan against property as its name suggests, offers funding by collateralising your property. Usually, lenders offer up to 75% of a property’s market value as credit. Moreover, funds availed under this credit facility can be used to meet an array of business and personal financial needs.

Therefore, if you are planning to apply for a LAP, you can keep a few pointers in mind to get the best possible deal.

Things to consider while availing a LAP

The market of a loan against property has gathered immense popularity among intending borrowers and is anticipated to grow at 22% by the end of 2023. Following are the factors that you can keep in mind before availing of such a credit facility:

• Applied interest rate

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

• Eligible loan amount

As already stated, for a loan against property, the sanctioned amount depends on the property’s market value. Additionally, the loan amount also varies depending on a borrower’s eligibility. Since the total loan amount will decide the total outstanding, it is ideal to consider it before applying.

• Loan repayment tenor

Since a LAP is typically a high-value loan, most lenders offer extended repayment tenor. With a longer tenor, EMIs will be lower, making the repayment easy for borrowers. Whereas with a shorter tenor, the EMI amount will be higher, but it will reduce the total cost of borrowing as you have to pay interest for a shorter period. In this regard, borrowers can use a loan against property EMI calculator to determine a suitable repayment tenor depending on their affordability.

Must Read: Things to Watch Out for When Taking a Loan Against Property

• Processing and other charges

Borrowers must factor in processing and other associated charges imposed by the lenders before applying for a LAP. Since these charges together increase the total cost of borrowing, it is essential to take note of them and plan accordingly.

Besides, borrowers must know that they can avail of a loan against property tax benefits stated under certain sections of India’s IT Act.

Therefore, considering these factors before availing loan against property will allow borrowers to plan their finances better and get the best possible deal.