Are you looking to avail of a large loan amount to meet many of your needs?
A loan against property (LAP) is one of the excellent options to raise a considerable amount. Lenders provide you with a large amount at a lower rate. Yes, the loan against property interest rate is lower as the property is kept as the collateral.
But before you apply for the loan against property in India, you ought to follow a few things. Read on!
Borrow as per your needs and not what you are eligible for
Even if it is the loan against property, you should always apply for an amount that you need and not what you qualify for. It is because a loan is a loan, and that needs to be repaid. Many people apply for an amount that they are eligible for and not what they need. The repayment amount (EMIs) will hamper your outlays for a fixed time. And it is why it is suggested to go for an amount that you need to meet your needs.
Go for a shorter repayment tenor
Most of the leading lenders in India may provide you with a longer loan tenure ranging up to 20 years. But you should not go for it. It is because you may pay a small EMI, but will need to deal with the higher loan against property interest rate. On the other hand, a shorter tenor may lead to higher EMIs but lead to the lower payment of interest rate. You can use the loan against property calculator to know an amount that you will pay as the EMI and then decide accordingly.
Ensure to make timely repayments
You should ensure to make timely payments towards the LAP that you avail. If you don’t make timely payments, then it increases the overall cost of the loan. It is because there are some hidden charges in the form of interest if you default. What’s more, when you don’t pay on time, then it affects your credit score in a big way. It also reduces your probability of availing the next loan at a lower rate.
Go for an insurance plan when you borrow a large loan amount
When you avail of a large loan amount, it affects your income for a long time. Therefore, the chances of defaults on loan could be higher. You should opt for an insurance plan to cover your family members if you don’t survive to repay it. This way, the insurance amount will cover the same, and your family members won’t have to suffer.
Avoid borrowing to invest
It is one of the unsaid classic rules! You should never use the borrowed money to make any investment. If you avail the loan to invest or fulfil your desire, then there are chances of it falling under defaults. As a result, you may fall into a debt trap. Loans are taken to meet your most urgent needs. And they must not be used for any light proposes. Thus, always ensure to know the difference between your needs and desires.
Double check the loan against property eligibility
Many prospective borrowers don’t go through the entire loan against property eligibility norms and documents needed. Hence, their loan applications are rejected. Being aware of the property loan eligibility makes your loan confident. Once you are aware of all terms, then you will be able to prepare for it in advance. Most known lenders offering the LAP facility have their eligibility conditions enlisted online on a website
Make sure to go through the terms and conditions of the lender
Another key aspect to consider before applying for the loan against property in India is checking out your lender’s terms and conditions. Most borrowers don’t go through it and regret it later. If you don’t do that, then you will need to deal with surprises later. It is the fine print of the loan that contains all hidden charges’ details. Thus, you should be aware of it to have control over the LAP.
Now that you are aware of the key elements that you need to check before applying for the loan against property, you will be able to do that confidently.