A loan against property is a smart way of financing big-ticket purchases and requirements. These are a type of secured loan backed by property or asset that can be pledged as a mortgage. เว็บตรงสล็อต Since such loans are backed by existing or pre-owned properties, they usually come at reasonable mortgage loan interest rates. Property loans are also a great way to borrow funds out of the property while keeping its occupancy. However, there are a few important factors that one must be aware of when applying for property Loan. Read on to know more.
6 Important Factors to Consider Before Applying for a Loan Against Property
The top factors to keep in mind when opting for a mortgage loan are listed below.
Property Loan Interest Rates
Property loan interest rates determine the overall amount you will need to pay on the borrowed amount. The rates typically depend on multiple factors, such as the borrower’s profile, credit score, ทดลองเล่นสล็อต income, employment status and previous records, age and value of the property, etc. It also comes down to the type of interest rate opted for. Usually, the two options available are: fixed rate of interest and floating rate of interest.
With fixed-rate loans, the rate of interest and monthly EMIs remain fixed throughout the loan tenor while with floating-rate loans, the mortgage loan interest rates tend to fluctuate as per the changing market rates. It is important to ensure the best deal out of the property loan by choosing a lower rate of interest.
Flexibility of Loan Tenor
The duration of the loan tenor is a crucial factor for property loan borrowers. While the tenor for a loan against property differs from one lender to another, it typically extends up to 15 or 20 years. One needs to strike the right balance between the monthly EMIs and the loan tenor. For instance, in the case of floating rates of interest, the compounding factor comes to play and affects the property loan EMIs when opting for longer tenors.
A loan against property offers tax benefits under the Income Tax Act, Section 37 and Section 24. While under Section 37, borrowers are offered tax benefits on the interest paid, under Section 24, customers are offered tax benefit on property loan of up to INR 2 lakhs on the interest paid provided the funds are used into financing a new house.
The amount borrowed depends largely on the value of the pledged property. Since different lenders offer different quotes based on the property evaluation (known as the LTV ratio), it is essential to evaluate the property rightly.
Ownership of Property
Lenders have all the right to reject a property loan application if the pledged property is a disputed one or if there are any inconsistencies in the documents and property papers. Multiple ownership of the property is also considered riskier if all the co-owners are not in favor of getting a loan. Therefore, to avoid any delays in disbursement, one must be sure of the loan against property documents required and the consensus of all the joint owners.
Foreclosure and Prepayment Charges
Lenders often charge additional property loan processing fees ranging from 0.5-2% of the sanctioned loan amount in accordance with the terms and conditions. Furthermore, lending institutions also charge nominal foreclosure charges for closing or repaying the entire loan amount before the expiry of the tenor.
Loan Against Property Eligibility Criteria
Before applying for a mortgage loan, lenders will want to confirm that all borrowers fulfill the following eligibility criteria:
- Age – must not be less than 28 years and more than 58 years
- Income – Must earn a monthly salary of INR 25,000/-
- Employment – Must have at least 3 years of work experience at MNCs or private/public sector companies
- Credit Score – Must have a decent credit score of 750+ with no pending bills and debts
When searching for the best deals on a property loan, be sure to compare between various lenders, assess the rate of interest and monthly dues using a property loan EMI calculator, and apply for the loan online for a hassle-free, seamless experience.