The loan against property market in India is anticipated to rise at a CAGR of more than 14% by FY2026. Hence, candidates planning to opt for a loan against property must know the most competitive loan against property interest rate and settle down for the most affordable option.
Here, we are going to learn the tips to ensure the lowest interest rates on loan against property. Keep reading to know more.
Tips to get the best rates for loan against property in India
When a candidate plans to avail of a lap loan, he/she must keep in mind that the lending terms differ from lender to lender. Generally, interest rates for a secured loan are lower than that of unsecured loans.
In this context, here are the tips that can help borrowers get the lowest rates of interest on a loan against property:
Tip 1: Reducing the principal amount
At times individuals tend to borrow more than they actually require to meet their expenses. Nevertheless, one should keep in mind that borrowing more than his/her eligibility attracts higher rates of interest. This happens because the lending institution views such applicants as high-risk borrowers with more chances of defaulting on the monthly instalments.
Tip 2: Keeping the right property as a security
Borrowers mortgaging a property situated in a prime location with all the modern amenities and proper transportation are more likely to get a lower interest rate. This is because such properties have a higher resale value.
On the other hand, an old or under-maintained property will have a lower resale value and, thus, higher rates of interest. In such scenarios, the lender will find it difficult to recover the outstanding dues by selling off the property in case of defaults.
Tip 3: Checking eligibility criteria beforehand
Before applying, willing borrowers must check the loan against property eligibility, Knowing these eligibility parameters and fulfilling all of them diligently reduces the chances of loan rejection.
Further, one should also keep all documents need to apply for a loan against property handy. Producing them as and when asked by the lender fastens the overall loan approval procedure.
Tip 4: Opting for a balance transfer facility
In case an individual finds a lender that offers a loan against property at more flexible terms, he/she should consider refinancing the ongoing loan. However, one must have a clear idea about the processing fees, prepayment charges, loan terms, etc., before opting for the balance transfer option.
Tip 5: Choosing the right interest rate
Borrowers should choose the right type of interest rate while applying for a loan against property. Ideally, financial institutions in India offer loan against property at fixed and floating interest rates.
In this regard, candidates can use a loan against property interest calculator to know their monthly instalments even before applying for a loan. This online tool is extended by most lending institutions in India. This free-to-use tool evaluates the EMIs based on the principal, rate of interest and total repayment tenor as entered by a borrower. This online tool allows willing borrowers to compare the different lending options available in the market and settle down for the best option.
In case of a fixed interest rate, the rate of interest remains unchanged throughout the repayment tenor. However, for floating rates, the rate of interest keeps changing with the fluctuations in the market.
That said, one should also check the factors that affect the loan against property interest rates. Knowing these factors and keeping them in check will allow borrowers to get the best deals while opting for this secured credit option.
In the End:
Moreover, several financial institutions in India extend pre-approved offers on secured credit facilities, such as home loans, loan against property, etc. These offers streamline and fasten the overall loan application stage and enable fast disbursal of a loan. Eligible candidates can check their pre-approved offers by feeding in the necessary details on the website of their preferred lenders.
A LAP is indeed one of the most popular credit options in times of financial crisis. Flexible loan against property interest rate, long repayment tenor and other lucrative benefits make this credit line popular. However, after getting a LAP, one should make sure to use the borrowed sum prudently and repay all EMIs on time. This will help them enjoy a hassle-free borrowing experience while keeping their mortgaged properties safe throughout the loan tenor.
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There are several benefits of taking out a loan against property, including the ability to borrow a large sum of money, longer repayment terms, and lower interest rates. However, it’s important to carefully consider the risks of taking out this type of loan, as failure to repay could result in the loss of the property offered as collateral.
It’s important to compare offers from multiple lenders, read the terms and conditions carefully, and make sure you have a solid repayment plan in place before taking out a loan against property. Additionally, it’s important to make sure you fully understand the terms and conditions of the loan and the potential risks involved before signing on the dotted line.
In conclusion, a loan against property can be a useful option for those in need of a large sum of money, but it’s important to carefully consider the risks and ensure that you have a solid repayment plan in place before proceeding.