Top 5 Things to Remember Before Taking a Loan Against Property

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applying for a loan against property
applying for a loan against property

A loan against property, as the name suggests, is a type of loan offered against an asset or property – land, residential or commercial property. In simple words, it is a loan which an individual can avail of by keeping his/her property as collateral. One can simply make the most of a loan against a property EMI calculator to make speedy calculations, thus making the procedure nothing short of a cakewalk. 

An online tool such as a LAP calculator allows for easy computation of the monthly equated instalments while considering three important factors – principal, interest rate and tenor. 

A mortgage loan can be availed and used for several purposes, such as:

  • Funding one’s child’s education
  • Funding a wedding in the family
  • Funding an exotic vacation
  • Funding unforeseen, hefty medical expenses
  • Funding a business/start-up

Another reason why many people choose to opt for a loan against property is that, unlike a personal or business loan, this is a secured loan offered by financial companies and banks. However, before applying for a loan against property, there are a few things that must be kept in mind.

Property value

The value of a property depends on a few factors – its age and size, locality, amenities offered, and reputation of the constructor. One should have complete knowledge of the property value to ensure that the lender offers the desired loan amount while applying for the same. Normally, a property worth a high value and located in a posh area fetches faster loan approval, as the lender considers it to be low-risk.

Rate of interest

Loan against property interest rates plays a major role in determining its affordability and the borrower’s ability to pay it off. Therefore, before taking a loan, one should always compare between lenders to obtain the best rate of interest. Another thing that needs to be remembered is the flexibility of the repayment terms that will make the repayment process easy, hassle-free and faster. Also, it may be a good idea to keep an eye out for any additional charges, as some lenders may offer a low rate of interest but charge some extra fees.

Get an estimate of the borrowed amount 

One must have a fair idea about the desired amount before applying for a loan against a property. To get a clear picture, one should make a list of expenses that has to be paid with the loan. For example, if the purpose of taking a loan is to fund the purchase of commercial space, then one must bear in mind the cost of the property in question while adding up the expense of other necessary equipment, interiors, etc. Other factors, like monthly income and usual expenses, should also be reviewed. This will help the borrower choose an amount that caters to his/her financial requirements.

Eligibility criteria

The Loan against property eligibility criteria can be different for each lender. Nevertheless, the borrower must be aware of the same before opting for a mortgage loan. This will improve the chances of approval and speed up the entire procedure. 

Whether the individual is self-employed or a salaried employee, he/she must meet the following criteria to be eligible for applying for a mortgage loan.

Salaried individuals:

  • Must be residing citizens of India
  • Must be between the age of 28 and 60 years
  • Must be working professionals at an MNC, a private or public company with a minimum experience of 3 years

Self-employed individuals:

  • Must be residing citizens of India
  • Must be between the age of 25 and 70 years
  • Must have a steady, fixed source of income in the business industry

Services and benefits offered

Sometimes, the lender may offer a few value-added services, thus enhancing the overall loan value. One must be sure to probe about the services offered that may include finding the right property, customized insurance schemes, and guidance on some technicalities associated with the purchase of the property. For instance, a few reputed lenders provide pre-approved offers for various loan products. This not only makes the approval process hassle-free but also saves considerable time. One only needs to fill in some basic details and review the pre-approved offer. 

The final word 

Keeping the above factors in mind, one can get the desired loan against property that is best suited for an individual’s financial needs. Remember, it is also a great idea to check one’s liabilities before taking a mortgage loan – and this is exactly where a loan against property EMI calculator comes in place. 

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