Features like affordable interest rates of mortgage loans, easy approvals, long repayment tenor, etc., have made a loan against property very popular in the Indian market. This secured credit facility allows individuals to obtain high loan amounts by pledging their immovable or commercial assets.
Borrowers looking forward to applying for a loan against property must keep several things in mind.
Best ways to opt for a loan against property
Choose the right loan repayment tenor
The repayment tenor of the property mortgage loan plays a vital role in deciding the overall payable interest. Individuals opting for a short repayment tenor have to pay higher monthly instalments. However, this lowers the total interest amount considerably. Financial institutions offer a loan against property for a maximum tenor of 15-20 years. Candidates must choose the right tenor based on their financial capabilities and goals.
Opt for the lowest mortgage loan interest rate
Lending institutions in India offer LAP on fixed and floating interest rates. As the name suggests, fixed interest rates remain unaffected by the fluctuations in the market throughout the repayment tenor. On the other hand, floating interest rates change with market fluctuations. Candidates must choose the type of interest wisely to avoid credit default and financial burden. Further, borrowers can check their monthly pay-outs beforehand using an online EMI calculator.
Maintain high CIBIL score
An individual must have a CIBIL score of more than 750 to opt for a loan against property in India. This score helps financial institutions assess the borrower’s creditworthiness and repayment history. A candidate with a decent credit score will get a high loan amount and easy approval. However, if a borrower has a low credit score, he or she may get a lower sanctioned amount at a higher interest rate.
Consider the additional charges and fees
While calculating the total loan amount, one must add the additional charges the lender imposes. These additional fees include processing costs, service charges, prepayment and foreclosure charges, etc. Hence, one must check the additional charges when choosing their lending partners.
Know the processing and approval time
The total turnaround time of the loan processing and approval should be minimum. Hence, borrowers must check the timeline of the application procedure while choosing their lenders. This will help them obtain the loan amount as soon as possible in times of financial setbacks.
Further, one should also know that there are several tax benefits that one can claim on the interest paid, under Section 37(1) and Section 24(B) of the Income Tax Act. Individuals should check the tax benefits on a loan again property to know more about the same.
How to apply for a loan against property in India?
You can easily opt for this credit facility by following these simple steps:
Step 1: Visit the official portal of their preferred lending partner and click on loan against property option.
Step 2: Then, fill up the application form for LAP and provide personal, professional and property details.
Step 3: After successful completion of the abovementioned steps, the lending partner will verify the documents and sanction the loan amount.
Eligibility criteria for a mortgage loan or LAP
An individual has to fulfil these eligibility parameters to opt for a LAP:
- He or she must be a resident of India
- The individual must be between 23 to 60 years of age (salaried borrowers) or 25 to 75 years old (self-employed borrowers)
- Working experience of at least three years in private or public sector or any MNC (salaried borrowers)
- Proof of steady business (self-employed borrowers)
Apart from low interest rates of mortgage loans, leading financial institutions, like Bajaj Finserv, provide pre-approved offers that reduce the total application and documentation time. Hence, willing borrowers should check their pre-approved offers online by entering their names and contact details. To sum up, borrowers can easily fund their personal and professional expenses by opting for a loan against property. Further, low interest rates of mortgage loans make them one of the best credit facilities in times of financial crisis.