Key Things to Remember Before Taking a Loan Against Property

Keyithings to remember before taking a loan against property

Published: Jan 30, 2023

A loan against property, also known as a mortgage loan, is one of the most preferred types of loans for availing a sizable portion of finance. A loan against property is a great way to finance big-ticket requirements and finances. These types of loans are also known as secured loans, as the loan is backed by a pre-owned property, carries lower interest rates and usually has higher tenures. The most appealing part about applying for a loan against property is that the borrower can spend the loan amount however they deem fit. In simple terms,loan against property is a type of loan where the borrower can apply for a loan by keeping the residential or commercial property as collateral with the lender. The pledged property is an asset that acts as a security for the lender

A property loan is a great form of financial assistance if you are short on cash or not in favour of liquidating your savings. With easy installments and low-interest rates on loans against property, this type of loan is a great way to extract property value while maintaining occupancy. A loan against property is a boon for both salaried and business owners. However, there are certain things to remember before you begin looking for a home loan that could help ease the application process and simplify your loan repayment. Here are a few key things to remember before you submit one.

Property Valuation

The amount of loan that you get will largely depend on the value of the property that you keep as collateral. To determine the loan amount the borrower is eligible for, the lender runs an evaluation process based on the property’s age, amenities it offers, locality etc. and provides you with a loan amount of up to 80% of the property’s value. Therefore, it becomes important to determine the property valuation to ensure that you get the eligible loan amount when you pledge the property.

Interest Rates

The interest rate levied on the mortgage loan determines how much more you will pay to the lender on the initial borrowed amount. The interest rate on a loan against property depends on several factors, such as your income, credit score, outstanding debts, and present economic situation, to name a few. Make sure that you compare interest rates offered by multiple lenders to get the best deal out of your loan against property by negotiating a lower interest rate.


The interest rate you get on a loan against property from the lender depends largely on your CIBIL score. A CIBIL score is a numeric reflection of your repayment history and tells the lender how you have handled your loan and credit card payments. Generally, if you have a credit score of above 750, you can avail of a loan against property at a lower interest rate, and you will also be in a position to negotiate other terms and conditions with the lender. Therefore, if your CIBIL score is good, you can apply for a loan against property without any hassle.

Eligibility Criteria

The loan against property eligibility criteria differs from lender to lender. To eliminate the chances of rejection and to get the desired loan amount, it is important to check the eligibility criteria defined by the lender. You can determine the eligibility criteria by visiting the lender’s website or contacting customer service.

Repayment Tenure

A loan against the property is a secured loan that offers a tenure of up to 20 years, depending on the repayment tenure set by the lender and the eligibility criteria of the borrower. When a borrower chooses to repay the loan in a shorter tenure, they will pay interest rates for a shorter amount of time but will end up paying expensive EMIs. On the other hand, if a borrower chooses to repay the loan for a longer tenure, the interest rate will be for a longer period, and the EMIs will be affordable. Therefore, one must use an online EMI calculator to understand the EMIs they would pay if they choose a particular loan amount and tenure.

Foreclosure Norms

Foreclosure norms are defined by the lender, where the borrower can repay the outstanding amount in less than the committed time savings that can save them from paying any added expenses. The sooner your home loan is paid for, the higher your CIBIL score will be.


It is important for a borrower to go through the agreement documentation thoroughly before applying for a loan against property. Applying for a mortgage loan involves extensive documentation as the collateral is involved here. Therefore, a borrower must ensure that he/she is fully aware of the documentation required and the same is kept handy to avoid any rejections or hassles in the future.

Additional Charges

Apart from the monthly installments, lenders might levy other processing, administrative or service charges upon the borrower at the time of loan application. Make sure that you discuss the additional charges with the lender before the loan application. Check with the lender if the additional charges are one-time charges or monthly. If the additional charges are monthly charges, then they need to be taken into consideration along with your EMIs, so that you can plan your monthly finances accordingly.
With all the aforementioned points, seeking a home loan becomes much easier and simplified. Capri Loans offers lower interest rates on loans against property, longer tenure, customised loan solutions, an EMI loan calculator and many other added benefits on loans against property.