A loan against property is one of the easiest solutions to your financial woes as far as expenses related to higher education, marriage or unforeseen medical bills are concerned. The fact that the money obtained can be used for both personal and business needs is what increases demand for property loans among borrowers. Nevertheless, before opting for such a loan, do take the following factors in account.
Factors to Consider When Taking a Loan Against Property
Property loan interest rates are typically lower than other loans because this type of loan involves taking your property as security. The rates may vary between 8.25% and 15%, depending on your overall profile and the type of interest you choose viz. fixed rate of interest or flexible rate of interest.
- Fixed rate is one that remains constant throughout the tenor irrespective of market trends.
- Flexible or adjustable rate, on the other hand, may change over time based on the fluctuating market rate.
It is advisable that you compare different loan against property interest rates and discuss the same with your lender to enjoy the best deal.
Credit or CIBIL score is a crucial factor that determines your loan against property interest rates. The score defines your creditworthiness i.e. how capable and reliable you are when it comes to repaying the loan amount. This includes your credit card bills, any outstanding loans or debts, etc. The higher your score, the better are your chances of getting a loan at cheaper rates. Ideally, lenders look for a score of 725 and above to be sure you are a good candidate for property loans.
Balance Transfer Facility
When choosing a property loan, find out if your lender offers you the facility of transferring existing balance. A loan against property balance transfer allows you to shift the outstanding loan amount from an existing account to a new one, thus fetching you a better rate of interest.
Under Section 37 of the Income Tax Act in India, you can avail tax benefits on the interest amount. Similarly, under Section 24 of the same Act, you are eligible for tax benefits on the paid interest provided the money is used for financing a house.
One easy way to pay off the loan amount comfortably is the EMI option that lets you repay the full amount in instalments. Based on your principal, tenor and rate of interest, you can get an estimate of your monthly EMIs. To do so, you will only need to access the online calculator on the lender’s portal and compute details. The calculator will instantly display exactly how much you need to pay every month. This not only reduces the burden off your shoulder but also gives you a heads up about the monthly dues, which automatically helps in better financial planning.
Loan Against Property Eligibility
Before applying for a property loan, ensure that you qualify for the same in order to avoid cancellation or delayed approvals. While some lenders may have different sets of criteria, loan against property eligibility typically concerns your age, source of income, and nationality. Here is a look at the common factors:
- Age – The borrower must be 23 years and not more than 62 years of age
- Nationality – The borrower must be a residing citizen of India
- Occupation – The borrower must have at least 3 years of experience working at a multinational company or a private/public sector organization
You can visit the lender’s portal to crosscheck and make sure you fulfil the eligibility parameters.
How to Apply for Loan Against Property
There are two ways of apply for loan against property. One is the offline method that requires you to get in touch with the lender and visit the nearest branch physically to get all the paperwork done. The other and more preferable one is the online method. This only requires you to visit the lender’s website and follow a few easy steps:
- Access the online application form and fill in your details – name, age, address, salary and property details.
- Submit the required documents along with the application.
- A representative will get in touch with you for verification before initiating loan processing.
- After reviewing the property, the representative will sanction the loan.
- Once all paperwork is done, you can expect the money to get transferred in 72 hours.
Applying for a loan against property online is easier, faster, and completely safe. The best part is you have the option of accessing the application form anytime from anywhere with just a click of your finger.
Banks and lending institutions offer huge loans up to Rs.5 Crore against property at reasonable interest rates. With such a big amount and no restriction on its end-use, you need not worry about arranging for funds for your dream wedding or cost of education abroad, or a start-up firm. Look up the best lenders near you and apply online for a seamless experience.