6 Important Things to Watch Out While Taking a Loan Against Property
A loan against property is a secured loan both salaried and self-employed individuals can take. The loan demands a residential or commercial property as collateral. These mortgage loans bring huge loan amounts up to 5 crores* at lower interest rates depending on the collateral’s value. The business owners can use the loan amount to fulfill their business expansion needs, while salaried individuals can manage huge medical or educational expenses.
Property Loans are easy to get as there is collateral involvement, and thus, you must watch over some essential things while taking the loan. Continue with the blog to consider the critical points before filling out the LAP loan application form.
Know the Value of Your Property
The first thing that a borrower must consider is the value of the property to be mortgaged. The property’s size, locality, and age highly influence the loan amount the applicant will receive. You must check the value of your property to ensure that it helps you reap the amount that you need. A high-value property in a promising locality will make the approval faster as the lender will be convinced better.
Search for Lenders Offering Best Interest Rates
While you look for the best lender, the foremost thing you must consider is the interest rate offered. Search for the lender offering the lowest interest rate as the repayment depends on it. A higher interest rate will increase the burden on your shoulder and make the repayment more challenging over time.
Check the Eligibility Criteria
Check the loan against property eligibility beforehand so that your application is not rejected. While you check the eligibility online, you will get the idea of whether you will get the loan or not. The eligibility circles around age, income, employment, and other factors. You must apply for the loan only if you pass the eligibility; if you fail, improve your profile.
Find the Amount You Need to Borrow
While you plan to take a loan against a property, the first thing you must know is the amount you need. The first step to applying for a loan is to evaluate the needs and find the amount to satisfy them. The value of your property also influences the amount that you can borrow. If the property is not satisfactory, choose to go for other loans. Fill in the amount that you can afford and repay without a default.
Calculate the Right EMI and Tenure
When you know the amount you need, you must calculate the EMI you can repay. The repayment will be in EMI, which must not exceed 70% of your monthly income for a manageable repayment. The tenure must also be selected, considering the current financial situation. Long tenures might increase the interest and can affect the EMI. Go for an EMI calculator online to find the suitable EMI, tenure, and amount for your property loan.
Other Charges and Penalties Applied on the Loan
Lastly, read the terms and conditions carefully while you apply for a loan against a property. Look for other charges and penalties that the lender can charge. Check if the foreclosure fee is high to avoid paying a huge fee in the future. Also, look for processing fees and other late penalties that the lender is obliged to charge before applying for the loan.
Apply for the loan only after you look up all these points. Evaluating these points will get you the best lender, loan, and experience. You must check your loan against property eligibility online before applying for the loan. Apply for a loan after you find a suitable lender and terms. The loan will be a long-term commitment, and therefore, you must be extra careful while taking any step. Check the documents required and collect them beforehand for hassle-free approval. Now, you can put the property to work and achieve all the goals at your convenience.