Top Factors To Consider While Taking A Loan Against Property
A loan is an answer to many of your financial problems. NBFCs are there to lend you the money that you need. These lenders offer a variety of schemes and loan options to the borrower. One loan type which is very popular and can give you a considerable amount of money to solve your financial problem is a loan against property.
Loan against property
It is a loan type where you pledge your property as collateral with the lenders to avail the loan amount to meet your money crunch. The property is safe with the lender, and you get it back when you pay off the loan amount. Any salaried or self-employed individual can avail this loan against a commercial or residential property.
Consider the Following Factors
You can avail a loan against property from a lender by making an online or offline application. You have to submit the required documents that would be proof of your age, address, income, and identity. You also need to produce the property documents and your credit report. Still, there are some very crucial factors, and one must consider them before going for LAP.
Factors To Check Before Taking Loan Against Property:
- Check your loan eligibility
The lender evaluates your ability for LAP based on the fulfilment of specific criteria, like age, your income, financial liabilities like other loans or pending credit card bills, your creditworthiness, and the current market value of your property. You can improve your loan eligibility by making your family member or friend as a co-applicant. You will have to provide valid documentary proof of age, income, address, credit report, and property value.
- The Loan amount
The total loan amount depends upon the current market price of your property and the loan terms of the lender. The routine practice is to offer 60% of the market value of the property as the loan amount. Select a lender who gives you the maximum loan amount on your property.
- Choose correct loan duration
Generally, the borrowers prefer a long tenure as it will make the EMI smaller. But if you go for a longer tenure, you are paying more interest due to which the loan becomes costlier. Hence, try to know the actual cost of the credit for a particular tenure, what different lenders are offering, and which suits you the best.
- Fixing EMI amount
The EMI amount depends upon the rate of interest, loan tenure, and your credibility. You have to make a mix which is pocket friendly for you and you can afford to pay in amidst all other expenses which you incur routinely.
- Foreclosure Fees
A LAP that has a fixed interest rate will charge 2% to 4% of the total amount of loan as the foreclosure fees. However, if the loan has a floating rate of interest, you need not pay any foreclosure fees.
- Rate of interest
Being a secured loan, loan against property comes with a lower interest rate. Different lenders offer different rates of interest, and you have to make the best deal. You must compare the loan against property interest rates and also select between the fixed and floating rate of interest for which you have to keep an eye on market fluctuations.
- A proper study of terms and conditions for the loan
You must be aware of the hidden or add-on charges or penalties. It includes processing fees, service charges, or expenses on administrative activities. Select the lender which offers the best deal.
Loan against property is an ideal option of raising funds in case of a financial crunch. It comes with a simple application process, lower interest rates, and hassle-free loan disbursements.
Read Also- QuickBooks Customer Support Number
