Do you need some large amount of money to meet some of your urgent financial needs? If yes, then a loan against property (LAP) could be one of the best alternatives to opt for compared to all other finance options.
Yes, compared to a personal loan that many people take to fund their needs which is available at a higher rate, the LAP comes at a lower rate to help pay lower EMIs.
If you have a self-owned home along with the loan against property eligibility, leading lenders can let you borrow up to Rs.1 crore and at a lower rate.
Since a loan against property is available against your home which is taken as collateral, you also get to enjoy a lower rate.
However, before you get up and apply for the loan against property (LAP), you need to consider some things. Considering the same will help you with the loan application and overall approval without issues.
- Borrow an Amount only as per your Repayment Capacity
Availing a loan against property of higher value may mean paying the EMIs for many years, and it may not be good as you won’t be able to fund other goals in life. Thus, apply only for an amount that you can quickly repay. Even though if you have the loan against property eligibility for 70% value of your property, avail only 30% of it if you don’t have extra needs. The Interest Rates on Loan Against Property is quite low, thus opting for it, gives the best benefits. Like this, you will be able to repay the loan quickly and won’t have EMIs to burden you in the longer-run while looking to achieve other goals.
- Opt for a Shorter Tenor if you can
Opting for a shorter tenor will mean paying a higher amount as the EMI for some years. But it will also help you avoid keeping the loan burden for a longer period in case of an extended tenor. Also, choosing a longer tenor may help you may lower EMIs, but you will also need to pay the compounding interest rate. Thus, if your income can manage a shorter LAP tenor, don’t miss to go for it.
- Don’t Default on your EMI payments
Ensure to pay off your loan against property EMIs as defaulting or delaying your EMI payment can never be a good thing. Not only may the lender charge you a penalty, but indulging in the irregular payment, can also hamper your Credit Score.
- Ensure to Avail the Insurance Facility on the LAP
While offering you a loan, lenders also offer to avail an insurance facility so that you get coverage against any possible loan defaulting. All higher loans such as the loan against property should have the protection of the insurance. Like this, lenders won’t sell your home in case of loan defaulting, and the insurance will cover the payments.
- Read the Terms and Conditions of the Lenders
Most people don’t read the fine prints of any loan as they are long and boring. However, it is good to read it at least once to be sure of the clauses for the late payments processing fee, prepayment and foreclosure and more linked to the loan.
The Bottom Line
A loan against property India facility helps you avail of a higher amount in case of an emergency at a lower rate. Now you can easily apply for a loan against property as you are aware of what to consider when applying for it.
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