A loan against property or LAP is a secured credit option where borrowers can derive high quantum funds from the lenders after pledging their immovable assets as collateral. What makes this loan option a viable one is the availability of a high-value loan amount at affordable loans against property interest rates. Furthermore, borrowers can continue to use the property and use the loan amount to meet a host of financial expenses.
Nonetheless, one must understand ways to get a competitive interest rate and find the best possible deal.
Factors affecting loan against property interest rates in India
To negotiate a competitive loan against property interest rates in India, borrowers must factor in specific parameters:
- Compare different lenders: Borrowers planning to avail of loan against property must invest time to compare various interest rates offered by lenders online and settle for the one offering the most affordable one. In this regard, one can take the assistance of an online calculator.
- Choosing a suitable loan tenor: The repayment tenor determines the affordability of any credit instrument. Borrowers opting for a longer repayment tenor will have to pay lower the EMI amount; however, the interest outgo is higher. Those who want to reduce the interest outgo must opt for a short loan tenor. The choice of repayment tenor depends on an applicant’s repayment capability.
- Property to be mortgaged: A property in question plays a significant role in determining the loan interest rate. Property’s location, age and condition impact the cost of borrowing. Residential properties are more likely to fetch a lower interest rate than commercial property. Any property in a good location with pristine conditions will draw a lower interest rate as well.
- Maintaining CIBIL score: The foremost parameter that affects a loan against property interest rate is a borrower’s CIBIL score. Individuals with a credit score of 750 and above are likely to get a competitive interest rate on a LAP. Debtors with subpar CIBIL scores are offered higher interest rates as they are considered high-risk borrowers.
- Borrower’s profile: Lenders scrutinise the entire financial profile of an applicant before deciding on a property loan interest rate. Salaried individuals have higher chances of securing lower interest rates than self-employed individuals. Furthermore, a borrower’s age city of residence also has a bearing on the LAP interest rate.
Similarly, lenders evaluate the debt-to-income ratio; high earning and lower debt-to-ratio are more likely to derive competitive interest rates.
Furthermore, the type of interest rate that a borrower opts for also plays a role in the affordability of a loan. Fixed and floating interest rates bring in their respective advantages in this scenario, and one can choose accordingly.
Besides getting a high-value loan amount, borrowers can reap loan against property tax benefits.
Steps to avail loan against property
The application procedure for a loan against property is simple. Borrowers will have to follow the steps mentioned below:
Step 1: Visit the official website of a preferred financial lender
Step 2: Fill out the online application form with the necessary details and attach the documents
Step 3: Glance through the terms and conditions of a loan option and then apply once satisfied
Once a loan application is approved and verified, borrowers will receive the loan amount in their account within the stipulated time. However, applying for LAP, borrowers must meet loan against property eligibility criteria to avoid rejection.
Another factor borrowers must consider is the disbursal time. In case of a LAP, it will take two to three weeks to receive the loan amount. So, depending on the urgency of acquiring funds, one should opt for a loan against property or a personal loan accordingly.
However, leading financiers extend pre-approved offers on financial products like loans against property, home loans etc. These offers expedite the loan application process and reduce the hassles of documentation. Individuals can check their pre-approved offers by entering personal details like name and contact number.
In conclusion, LAP or mortgage loan is a popular financial choice. However, the availability of ample options in the market can baffle a borrower. In that regard, individuals must sort out the best loan against property interest rate to get a cost-effective deal that does not strain one’s finances.