A loan against property comes across as a type of blessing for both self-employed and salaried employees as it is provided by many renowned NBFCs and banks. If you are the owner of a property whether a residential or commercial plot, then you can put this as security with the bank and get a loan against the property option at a lower rate of interest than gold or a personal loan.
The best part here is that such loans are multipurpose in nature, meaning you can avail them to meet any of your purpose like higher education, wedding, business expansion, medical bill payment, home renovation, etc. Also, as this loan is secured in nature, so you can also take up a loan against property without income proof or having a good credit score as the major emphasis is given on the property that you present as security or collateral by the lender. However, before you avail a loan against property, it is recommended to use an online loan against property EMI calculator to efficiently compute the appropriate loan repayment tenure and preferred interest rate based on your cash inflows and repayments. Once you are aware of such figures through the online loan against property EMI calculator, ensure to negotiate with the lender for a property loan against a property deal.
What is meant by a loan against property?
Loan against property is even addressed by the term LAP. This is one of the secured credit options, which you can use to serve your distinct personal or business purpose like arranging funds for weddings, business expansion, higher education, medical bills, home renovation, etc. A loan against property functions the same as a personal loan with the only difference being that it is secured in nature and thus it is a must for you to pledge your property as security or collateral to avail the loan proceeds. Lenders and other lenders offer loan against property deals based on distinct parameters like your present liabilities, credit history, monthly income, and others.
This multipurpose loan comes with a low-cost EMI as it attracts a lower rate of interest owing to its secured nature, as mentioned above. Also, a loan against property comes with a high repayment tenure, which may go as high as 20 years and ensures to provide a repayment option, which is hassle-free and stress-free. Also, you must ensure to be careful when submitting your loan against a property application. Here are some of the crucial points you must keep in mind before opting for this option –
Assess the property value
As stated above, a loan against property is offered when any immovable property like commercial property or residential property is kept by you the borrower as security or collateral. To decide the loan proceeds that you qualify for, financial institutions tend to run an assessment procedure, which is based upon the property’s locality, age, amenities available, etc. and offers you the proceeds of as high as 80 per cent of the value of the property. Thus, it is extremely necessary for you as a borrower to stay aware of the property’s value so that you become eligible for the loan proceeds you require to meet your personal or business expenses.
Check out your credit score
The rate of interest that you get from any lender on a loan against property basically is dependent on your score. A score is nothing but a numeric representation of your past repayment record, which reveals to the lender all regarding how you have managed your loan as well as the credit card dues.
In case you hold a good credit profile and score of over 750, you will be able to avail loan against property at a lower rate of interest and even will be in the position to negotiate on various conditions with the financial institution of your choice. In contrast, if you hold a low score, the financial institution will either not provide you with a loan deal or you might get the same at a higher rate of interest that might propel you to repay a higher EMI amount. Thus, if your score is good, ensure to apply for the loan against the property option with zero hesitation and if it is low, begin paying your EMIs timely and wait until it is improved.
Compare the rate of interest of distinct lenders
Never instantly rush to the lender whom you approach the first time or with whom you share an existing relationship. The loan rate of interest has a massive impact on your overall outgo in a loan that you are liable to pay for a 20-year period. Thus, ensure to compare the rate of interest of distinct NBFCs and banks before you place an application for a loan against a property option. To save on effort and time, online platforms too permit you to compare rates of interest of distinct lenders in a single platform as per your repayment capacity. Once you have compared, you may be in a better position to select the bank providing the lowest rate of interest on LAP, thereby saving massive money.
Beware of the lender’s eligibility parameter
The eligibility parameter to place an application for a loan against property offer varies from one lender to another. For instance, lender ‘A’ might provide a loan against property option to you as an individual if your age is 22 and above while lender ‘Z’ may require your age to be 25 and above. Also, the minimal income parameter for lender ‘A’ might be Rs 50,000 and for lender ‘Z’, it might be Rs 30,000.
Thus, to reduce the chances of facing a loan rejection and to avail the desired proceeds, it is a must for you to be aware of the lender’s eligibility parameters before you place the application for a loan. Note that, you can simply find out the loan’s eligibility parameter by either approaching the lender’s official website or by directly contacting the lender’s customer care support team.