Things to remember before applying for a Loan Against Property
Loan against property is a secured type of loan where one needs to pledge their property to avail a loan. However, there are certain terms and conditions that needs to be known by the borrower before going ahead with it. These terms and conditions can be overwhelming for first time borrowers.
Following are a few points you should keep in mind while applying for a loan against property.
Loan amount
Loan against property is a secured type of loan where one can avail a larger sum of money at lower interest rates than other unsecured loans. You can avail a loan from ₹5 lakh up to ₹7.5 crore depending upon the value of your property. The value of the property will be directly proportional to the loan amount that is offered by the lender. Higher the value of the property, higher will be the loan amount.
Interest rate
The interest rate of loans against property are usually lesser than the unsecured loans. Choose your interest rates wisely as it may make a bigger impact in the longer run. A loan with a lesser interest rate will save you a bigger sum over a period of time.
Tenure
If you’re someone who wants a longer tenure, loan against property is the perfect choice. Since it is a secured loan, the lender will be more than willing to offer you a longer tenure. But you have to make sure you strike the right balance between tenure and EMI that needs to be paid.
Property valuation
The value of your property will play a major role in your loan against property application. The lender’s first priority would be to evaluate the property that is to be pledged. Based on the value of the property and loan requirement, the lender will finalize applicable LTV (Loan To Value) as per the product chosen.
Property ownership
If the property that is to be pledged is under single ownership, the process will be much simpler. If it is under multiple ownership, each one should approve in favour of getting the loan. If someone from the joint ownership doesn’t approve of the loan, the lender will have no other option but to terminate the loan application process. So, make sure all the co-owners are on the same page.
Documentation
Documents are the core of any loan application process. Especially while you’re applying Loan against property, the documents of the property that is going to be pledged will play a crucial role. If your lender finds any inconsistency or discrepancies, they will not move your application to the next stage.