What To Keep In Mind Before Taking Loan Against Property?

By Author: Inr Credit
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Loan against property, if you are not aware, is a type of loan wherein you keep your owned property as a collateral and get loan against the same. Most banks and financial institutions are offering this service that comes with a plethora of benefits like lower EMIs, long loan tenure and lesser interest rates.

In most cases, you can get a loan up to 75% of the property value which sounds like a great idea. But, it is suggested that you keep the following factors in mind before you go and avail a loan against property:

Do not borrow more than your need or repayment capacity

People often fall into the trap of being greedy when it comes to borrowing. You must borrow only what you need and that must be in your repayment capacity. Making a mistake while borrowing may lead to repayment problems in the future. As a basic rule of thumb, one should not have to pay EMIs more than 60% of their net salary.

Opt for a lesser tenor

The maximum tenor period offered in a LAP is 15 years. This only makes the loan more tempting and people fall in the trap of opting for longest possible tenor. One must be aware, ...
... longer the tenor is, more will be the interest amount you will pay.

Understand the fine prints well

Loan documents that come with detailed terms and conditions are long and most of us find them boring to read. Many of us may not even understand them well. This is a mistake that you make unknowingly and can cost you a lot in the longer run. Since the document contains legal terms and policies regarding your loan it is important that you read them well.

Loan with High Interest Rates Can Be Replaced with LAP

If you have taken multiple loans and the EMIs are becoming unbearable, in that case, a loan against property may come to your rescue with lesser interest rates. This loan can be availed to pay off existing multiple loans.

Who can avail a Loan against Property?

You must be a citizen of India

You must own a loanable property

LAP always requires a good CIBIL score

You must have a regular source of income – whether you are salaried or self-employed.

Your total income, savings and financial conditions should meet the requirements by the lending institutions.

Source:https://www.freeprnow.com/pr/what-to-keep-in-mind-before-taking-loan-against-property