As an asset-backed credit instrument, the rate of interest of a loan against property is always lower than any unsecured loan. This is the most sought after loan after home loan. However, before taking this financial commitment, applicants need to know certain important things to successfully apply for a loan against property online or offline.
5 important things to know before applying for a loan against property
- Loan against property eligibility criteria
Eligibility criteria differ from lender to lender. Generally, one needs to be a resident of India and must be above 25 years of age. Additionally, the person must be self-employed or salaried. Therefore, it is always time-saving to know the eligibility criteria prior to applying. This will ensure fast disbursal of loans and lessen the chances of rejection.
As lenders scrutinise some factors for loan approval, self-checking on income, other financial obligations, job security, and property valuation will help understand whether an applicant is ready to apply for a loan against property. Individuals can also take help of a loan against property eligibility calculator to find out the same.
- Compare various lenders and their interest rates
Interest rate of loans also differs from lender to lender. But, comparing the interest rates of various lenders will help individuals choose the lowest interest rates possible. Also, one should look for a flexible prepayment term to aid in repayment and clear the loan faster.
The interest rate at which an individual takes their loan against property has a direct impact on affordability. So, apply for a loan against property online for the lowest interest loan without any hidden charges. Applicants can use a loan against property EMI calculator to compute their monthly loan repayment amount and better plan their finances.
However, lenders will determine sanctioning of a loan against property based on the collateral pledged as security. Simply put, one can avail the lowest rate of interest for a high valued property, where they can generally get maximum 60-80% loan amount of their collateral’s value.
- Check CIBIL score
CIBIL score above 750 is ideal for any loan application. As lenders scrutinise CIBIL scores to determine an applicant’s creditworthiness, one should keep a check on their CIBIL score and credit history before applying.
- Property valuation
Knowledge of the property valuation is essential for a loan against property application. Each property has a different value based on its type: residential or commercial.
Generally, property with high value in a good location is appealing to the lenders as they consider this type of collateral more secure. Neither past nor expected future value determines the property value; rather, it is determined on the current market value.
- Loan tenor
The tenor of loan against property plays a significant role in repayment as EMIs are equally distributed over many years. Usually, lenders approve a repayment tenor of 15 years but can exceed up to 30 years. The longer the tenor, the lower the EMI; however, applicants must note that a longer tenor significantly increases their total raiment outgo. Therefore, it is always better to opt for a shorter tenor, if possible. For a hassle-free repayment, determining the ideal tenor for a loan against property is crucial.
Applicants can also opt for a loan against property balance transfer, if the present lender is charging higher a higher interest rate and save on their borrowing costs. However, one should only opt for this facility during the initial years of the loan.
Apart from these 5 above mentioned things, applicants must also consider other factors, such as various application formalities, loan disbursal time and processing and penalty charges.
Additionally, leading financial institutions extend pre-approved offers for eligible customers to further streamline the application process. So, interested borrowers can check their pre-approved offer by providing their name and contact details.
To sum up, individuals seeking a longer repayment period at a lowest interest rate can apply for a loan against property online.