Key Things 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.
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.
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.