Individuals might find themselves in a situation where it becomes difficult for them to manage the funds due to a financial emergency. In such a case, they can consider opting for a loan against property.
This credit facility, offered by several lending institutions, allows them to obtain a sizable loan amount by keeping a property asset as collateral. This article talks about the ways to choose the best LAP according to financial requirements.
How to choose the right loan against property option?
While choosing the best loan against property to meet their financial requirements, an individual must consider the following points:
- Comparing different lenders
Before opting for a loan against property, willing borrowers should do thorough research in order to determine the right financial institution as per their needs. Borrowers must check the current interest rate on loan against property charged by the lender, as this factor affects the total repayment amount drastically. In this context, one can use a loan against property EMI calculator to know their exact monthly instalments even before applying for this credit and make an informed decision accordingly.
- Loan repayment tenor
Due to its secured nature, the loan repayment tenor of a LAP is considerably more than that of a personal loan. However, willing borrowers should choose their repayment tenor wisely. A long repayment tenor reduces the monthly instalments, but the rate of interest and the total payable interest increase.
- Tax benefits
Potential borrowers should know that they can claim loan against property tax benefits for the interest paid on the borrowed sum. They can apply for tax deductions under Section 37(1) and 24(B) of the Income Tax Act of 1961 in specific situations. Knowing the tax exemptions will allow an individual to save a considerable amount of money and help manage their finances in a better way.
- Additional charges and fees
While choosing the preferred lending institution, one should also consider the additional charges associated with a loan against property. These charges include processing fees, service charges, prepayment and foreclosure charges, documentation fees, etc. These affect the overall borrowed amount significantly. Hence, one should settle for a financial institution that charges the lowest additional charges.
These are the points that will help potential applicants choose the best lending institutions so that they can reap the maximum benefits from their loan against property.
Eligibility criteria for a loan against property in India
An applicant must meet the following loan against property eligibility criteria to avail the benefits of this credit facility:
- An individual’s age must be between 28-58 years
- The applicant must be a resident of India
- He/she must be working in a public or private sector firm or in an MNC
- The borrower must have a stable flow of monthly income
- The applicant must be an Indian citizen
- He/she must belong to the age group of 25-70 years
- They need to show proof of a stable income source
Apart from the points mentioned above, a CIBIL score of 750 and above greatly improves eligibility prospects.
How to apply for a loan against property?
Individuals can apply for a loan against property by following these simple steps:
Step 1: Visit the preferred lending institution’s website and look for the option of ‘loan against property’.
Step 2: Fill out all the details in the application form and produce the necessary documents as asked by the lender.
Step 3: Following this, a representative from the lending institution will get in touch to verify the details.
Step 4: After successfully verifying all the details, the lender will sanction the loan amount within the shortest turnaround time.
In addition, borrowers can also check the pre-approved offers extended by the top lenders on financial products like loans against property, home loans etc. These offers expedite the overall lending process and ensure a smooth borrowing experience.
To sum up, one should consider the pointers mentioned above while deciding on a lender while opting for a loan against property. This will ensure that they get the maximum benefit from this credit instrument.