5 Things Remember Before Taking a Loan Against Property
A loan against property, as the name suggests, is a high-value, secured loan taken against an immovable property, such as a residential or commercial property, or land, kept as collateral. Most lenders offer competitive interest rates starting from 12.90% up to 18.80% over a flexible loan against property repayment tenor. The best part is that such a loan allows you to utilize the amount taken for various purposes – be it for funding your child’s education or planning a wedding, starting a business or funding a medical emergency.
Loan Against Property: Best Features & Benefits
The various exclusive features that come along with them make property loans a popular financial option among borrowers. The top benefits are as follows:
- Higher Amount at Affordable Rates: You can get a loan amount as high as Rs.5 Crore or even higher at affordable rates, depending on the type of property and interest rate chosen.
- Flexible Tenor: The loan repayment tenor is flexible and can extend up to 18 years. This gives you ample time to sort your finances and make arrangements for part prepayments.
- Flexi Loans: With this feature, you have the option of withdrawing the required loan amount from the pre-approved credit limit and paying the outstanding amount as per convenience.
- Balance Transfer: Some lenders offer a balance transfer facility that allows you to transfer your existing loan with minimal documentation.
- Flexi Dropline: One of the most exciting features of a loan, Flexi Dropline allows you to borrow funds and pay interest on the utilized amount only for better financial management.
- Quick Disbursals: Property loan disbursals are usually quick and hassle-free. Though many lenders can disburse off the fund amount within a week, some lenders take more than a week. So, be prepared.
Things to Remember When Taking a Property Loan
Although the features and benefits of loan against property seem alluring, you must keep in mind the other aspects before applying for the same. Here’s a look at the five most crucial points to remember:
Loan Amount Based on Property Evaluation
Before determining the loan amount, your chosen lender will assess your property – its age, condition, and location. The amount offered will depend on the current market value of the property pledged as collateral. Usually, lenders offer up to 70-75% of the property’s market value (known as the Loan-to-Value or LTV Ratio). Thus, you should analyze the LTV ratio offered by the lender. A high-value property in a good locality fetches a higher amount and faster approvals.
Repayment Tenor
Most lenders offer a loan against a property repayment tenor of up to 18 years. Such a long tenor sure lowers your monthly EMIs, thus making it affordable for borrowers. Make use of the loan on property EMI calculator to get a clearer idea of how much you will be paying each month. Nevertheless, you must keep in mind that extending your tenor will also increase the cost of borrowing, as the rate of interest is calculated in a compound manner.
Rate of Interest
Loan against property interest rate varies depending on many factors, such as your credit history, income, loan tenor, etc. You will need to do some research and compare between lenders to get the best rates. Also, the rate will depend on whether you go for fixed interest rates or floating interest rates.
Eligibility Criteria
Before getting started on the application process, check your loan against property eligibility criteria. To qualify for the loan, you will have to meet the criteria, which will vary from lender to lender. However, most lenders have these qualifying criteria for a loan against property.
- The borrower must be between ages 28 and 63.
- Must be a residing citizen of India.
- Must be a working professional at an MNC, public or private sector with at least 3 years of experience.
Repayment Capacity
You will need to provide relevant documents to evaluate if you are capable of repaying the borrowed amount. Your repayment history, monthly income, outstanding loans (if any) – all are taken into consideration. It is a good idea to limit the borrowed amount that you will be comfortable paying off in the long run.
With these points in mind, avail of a loan online for a seamless experience. Visit the lender’s website, fill in the application form, and submit all documents required to support your loan application claim to get faster approval.
