The loan against property market in India has always been steady. The reasons can be attributed to its high-value funds, zero restrictions on end-use, and affordable loan against property interest rate.
However, like any other debt, individuals also need to be careful of certain things while applying for this loan. It will ensure a seamless repayment and better utility of funds raised.
Things to consider while applying for a loan against property
Following are some primary factors that individuals need to consider while opting for a substantial loan against property:
1. Eligibility criteria
Since a loan against property is a security-backed credit, the lending risk is comparatively lower than unsecured options. Resultantly, individuals need to meet only a few basic eligibility criteria to qualify for this credit.
Although the eligibility criteria for a loan against property vary with lenders, following are some common ones that individuals need to fulfil:
- The applicants must be residing citizens of India
- Should be aged from 28 to 60 years (salaried) and 25 to 70 years (self-employed)
- Must be employed at a reputed MNC or public or private organisation (salaried)
- Should have a steady income source (self-employed)
Besides, they also need to submit a list of documents to prove their credibility. Note that meeting the eligibility parameters is crucial to secure competitive LAP interest rates.
2. Loan principal
One of the reasons individuals opt for a loan against property is the availability of a large sum at affordable mortgage loan interest rates. Typically, the loan amount depends on the current market value of the property and the LTV.
If you can collateralise a high-stake property, you are likely to qualify for a substantial loan amount. However, the repayment capacity of the applicants also plays a vital role in the final sanctioned amount. Typically, the LTV depends on property type, occupancy status, property age, amenities available, etc.
3. Interest rate
The property loan interest rate varies with lenders, and therefore, individuals need to compare different financiers to secure the best deal. Typically, individuals can choose between fixed and floating interest rates while applying for this credit.
Besides the rate type, there are several factors that affect the interest rate for LAP, for instance, the FOIR of applicants. However, selected financial institutions offer a high-value loan against property at reasonable interest rates.
They also facilitate LAP balance transfer and offer a sizeable top-up loan along with this facility.
4. Repayment tenor
Like most mortgage loans, a LAP also accompanies a longer tenor. It allows the borrowers to repay the loan conveniently without heaving their budget. However, while longer tenor promises affordable EMIs, it increases the interest outgo. ‘
However, prospective borrowers can use a loan against property calculator and adjust the tenor to arrive at an EMI payable feasible for them.
5. Associated charges
Understanding the charges on your loan against property is necessary for efficient financial management. Depending on the services availed, the additional charges can be of different types, such as processing fees, part-prepayment, foreclosure charges, etc.
However, you should look for a lender that imposes nominal to zero additional charges.
6. Application process
The turnaround timing of a loan against property alters with lenders. Hence, individuals need to know the average time a lender takes to approve and disburse the loan. It helps, especially when you are applying for a financial emergency.
Leading financial institutions also extend pre-approved offers that make loan processing straightforward and quick. These offers are also available on a host of financial products like home loans, LAP, and likes. You can check your pre-approved offer by entering your name and contact number.
Besides loan against property interest rate, these are the factors most crucial for individuals planning to opt for a LAP. However, they should also consider the tax benefits available when the funds are used for certain purposes, such as home renovations and business-related expenses.Home finance company
