Do you have a property that you would want to keep it as collateral and avail a loan against property to cover many needs in life? You are not alone, there are many prospective loan seekers who look up to a loan against property in India.
Yes, be it the need to financing your child’s quality education, managing your wedding costs, business expansions, or handling emergency medical expenses, you can look at Interest Rates on Loan Against Property to fund all.
Once you have the required loan against property eligibility, you will still need to consider some golden rules before signing the loan agreement. Let’s take a look:
Borrow Only as per your Repayment Capacity
Do you want to keep paying your loan against property (LAP) for many years and keep affected your monthly income for long? If no, then you should always borrow an amount that is under your capacity to repay. As per the market value of your property, most lenders can offer between 50-90% of the value of the home. Financial experts suggest keeping the LAP EMIs between 60-70% of your monthly income max as paying a large EMIs can eat a huge portion of your income. Hence, you may have to compromise on other financial goals.
Opt for a Short LAP Tenor if you Can
Opting for a short tenor may need you to put down a large amount each month as the EMIs for some years but that will also save you from having an obligation for long. Longer loan against property tenors may attract you to pay lower EMIs over a long period but that may lead to eventually paying more compounding mortgage loan interest rate. If you have a consistent income, you can try to afford a shorter loan against property duration.
Ensure to Repay the EMIs on Time
Did you know that defaulting or delaying your LAP or any other loan can land you in trouble other than reducing your CIBIL Score considerably? Yes, for delayed or missed loan EMIs, your lender may charge you a penalty and irregular payments can hamper your Credit Score. Both these scenarios can reduce the possibility of availing another loan in the future. Thus, if you have opted for a loan against property, it should be your prime duty to clear the EMIs and keep yourself ready for another loan in the future.
It’s good to Avail of Insurance with Big-Ticket Loans
A loan against property is provided against your home which the lender can freeze/sell if you fail to repay the loan within the stipulated tenor. Thus, to ensure that the lender does not sell off your house in case of default, you must get an insurance to cover all loss. Yes, many situations such as an income loss or a major medical situation demanding money may not let you make timely EMIs and may lead to defaulting. Thus, availing an insurance coverage available with the loan by lenders themselves should be your goal.
Additional Read: 5 Factors that Impact your Loan Against Property Interest Rate
Don’t neglect to read the Fine Prints at least once
No matter how long is your mortgage loan fine print (terms and conditions), every borrower should go through it at least once. It will help you go through all the charges and other aspects of the loan so that you may be in control of it in case of a conflict.