Applying for loan against property could be a smart way to meet your financial goals – be it consolidating your debts, funding your child’s education, or paying for unforeseen exorbitant medical bills. A loan against property is a type of a secured loan where one can keep their property as mortgage for a fixed period in exchange for funds. However, before opting for a property loan, there are a few crucial factors that you must bear in mind.
Know the Benefits
Property loans come with a host of benefits and attractive features, such as a high loan amount, competitive rate of interest starting at 8.25%, affordable EMIs, and a flexible tenor extending up to 18 years. Some lenders also offer the option of easy balance transfer and flexi loan facility, which adds to borrower’s convenience. Moreover, a loan against property acts as a multipurpose loan where one can utilize the money for various purposes — there’s no restriction on its end usage.
Evaluate the Property Value
Remember that the loan amount offered depends on the market value of the pledged property. Usually, this accounts for 70-75% of the property value depending on the lender you choose. Get in touch with your lender to have a clearer idea of your asset value beforehand to ensure you are in a good position to negotiate and avail of a better loan against property interest rate and a higher loan amount.
Compare Rate of Interest
Note that factors, such as the type of property (residential or commercial), location and age, and the amenities available also determine the interest rates. Therefore, when taking a property loan, compare the interest rate offered by lenders to ensure the best deal. Your loan against property interest rate directly affects your monthly EMIs i.e. a higher rate of interest means higher EMI and vice versa. Also, compare other charges, such as prepayment penalty, foreclosure and processing fees levied by the lender. Such charges are likely to increase your overall cost.
Assess the Loan Amount
Settling for the right loan amount can be difficult if you do not have an estimate in mind. It is better to list down all expenditures that you will likely be paying with the borrowed funds. For instance, if you are planning on using the loan to pay for your child’s higher education, calculate travel expenses, admission fees, and the cost of accommodation, etc. This will help you assess the correct loan amount. Also, consider your monthly income and other financial obligations (if any) before selecting the loan amount to ensure you will be able to repay the same with easy EMIs on time.
A property loan calculator can aid you in this. You can access the tool online and enter chosen loan amount, tenor, and rate of interest to get a fair idea of your monthly dues.
Check Your Property Loan Eligibility
While a property loan may seem like a smart loan option, not everyone can qualify for the same. To be able to apply for a loan against property, you will need to meet the basic eligibility criteria predetermined by the lender. These are as follows:
- Must have Indian citizenship
- Age between 23 and 62 years of age
- Must be an employee at an MNC or a private/public sector company with at least 3 year of experience
Additionally, the borrower must have a decent credit or CIBIL score (preferably above 725) and a steady source of income. Meeting these lender-specific requirements can minimize the chances of your loan application being rejected and ensure a smooth, hassle-free procedure.
How to Apply for Loan Against Property Online
- Access the online application form on website and fill in your personal, property and employment details
- Submit all details along with the necessary documents and await verification by the lender
- Post verification of all documents, the lender will evaluate your property’s condition – this also includes looking into legal documents to rule out any possibility of disputes
- If everything falls in place, the next step involves having your loan sanctioned
- Finally, the amount is credited to your bank account within 72 hours
The online mode of application is certainly the easier and faster way of availing funds. Not only does it save you ample time but also allows you to get in touch with the lender from the convenience of your home.
To put it simply, opting for a property loan involves a lot more research and understanding. So before you apply for it, make sure you have gone through the current market rates and are well aware of the set property loan eligibility.
