Things You Need to Know Before Applying for a Loan Against Property

Land or property is inherently a safe choice to invest money. Indeed, owning a home or property is one of the greatest lifetime assets of an individual’s life. A property can be your saviour while dealing with a monetary crisis. Unforeseen financial expenses can happen anytime. When you find yourself in such critical situations, a monetary aid through a loan against property can get you out of the hardship. A Loan Against Property or a property mortgage loan is a type of loan you can avail by pledging your property as security. As it is a quicker way of availing funds, most of the people prefer this to finance their urgent needs. But it is essential to understand its various aspects before applying for such a loan. 

Here are some factors that you need to keep in mind before going for a mortgage loan against property. 

The value of the property – Whether you need the loan to fund a dream vacation or your marriage, knowing the value of the property can help you plan accordingly. Being aware of the total cost of a property is essential to check the probability of getting the desired amount. The value of properties varies according to its age, existing locality, area, and other factors. Lenders usually consider a high-value property, in an excellent neighbourhood to be of minimal risk, hence make the loan approval faster. 

Rate of Interest – Banks and other financial institutions usually offer loan against the land with lower interest rates. But the interest rates vary from bank to bank. Factors such as your income, loan amount, tenure and credit history can also alter the interest rates. Moreover, the rate of interest can determine your repayment ability and, the affordability of the loan. Hence, thorough check and comparison can help you avail the loan with affordable interest rates. 

The loan amount – A precise estimate of the needed amount can help you borrow the right loan amount. Depending on the lender, a borrower can get up to 80% of their property’s market value as a loan. Hence, if you need a higher amount, it is advisable to preplan well by writing down the financial needs and reviewing it thoroughly. Checking your income and expenses can determine your monthly EMI payment ability. Research well by considering all these factors. 

Processing charges – Invest a significant amount of time on researching about the processing charges and other fares that come with the loan. The lenders may impose service charges, foreclosure charges, loan processing charges, etc., on loan. Evaluate all the hidden fees before applying for the loan to understand the actual cost of the loan. 

Eligibility Criteria – Understanding the eligibility criteria of the loan can reduce the chances of rejection. Fulfilling eligibility can also increase the chances of faster loan approval. The requirements for getting a loan differs depending on the lenders. Usually, any Indian resident who has a regular income with minimum job experience and a decent credit score can avail a loan against property.