Loan against property means availing loan amount from banks by pledging a particular property as collateral. The following points must be kept in mind while availing a loan against property by the borrower to make the whole process easier, hassle-free and within time bound:
- Value of your Property:
On the basis of age, locality, size, reputation of the owner or the builder and amenities available around it, the value of property is calculated. The owner must be aware about the property’s total value. This important because the amount, that is desired by the borrower for loan from the lender, is based on the value of the property that will be pledged as collateral. Therefore, it is advisable to get valuation of Immovable property and other property on which the loan amount is to be availed.
- Ownership of Property:
The bank before providing any type of loan against property always verifies that the property taken as the collateral is free from any legal or personal dispute. Therefore, the owner must have the property papers that state his/her ownership on the same very clearly.
- Estimate the Loan Amount:
It can be really difficult to avail the exact amount required by the borrower, if they don’t have a proper estimation about how much funds they need. They should make list of all the expenses and purchases that are to be made with the loan amount and then estimate the required amount.
- Ability to Repay the Loan:
Since, the amount of loan against property is higher than the other types of loans, the banks usually, considers a particular income criteria of the borrower for repaying the loan amount. If the income is higher, the assurance for repayment automatically becomes higher.
- Check Various Lenders:
It is always advisable for the borrower to check all the available lender options and compare them. They must check the best one that suits their needs and provides loan against property with ease. Also, the charges and extra fees, processing fees for various lenders must be compared as well.
- Eligibility Criteria:
The borrower must examine the eligibility criteria for this type of loan. Different lenders have different eligibility criteria. Understanding them beforehand eliminates any chance of disapproval or rejection of the loan application.
- Rate of Interest:
The borrower must check the rate of interest for various banks before applying a loan against property. Most of the banks that takes collateral for issuing loans, offer such loans on lower interest rates. This can be really profitable for the borrowers as the repayment amount in total is small and can be easily paid off.
- Time Frame of Repayment:
Banks approve the loan against property with contracts that are for longer terms. The time frame for repayment of the loan is usually 4 to 6 years, which can be extended up to 8 to 10 years in total. The longer the tenure period for repayment of loan, the lower the installments for the borrower. This eases their burden. It involves short term business loan against the property of the owner.
- Other benefits and services offered by Lenders:
The borrower should also check for the value added services and benefits that the lenders provide at time of providing loan against property. Such services can be helpful in enhancing the value of loan or even lower the interest rates.
With all these factors in mind, a person should ensure to select the right loan against property option for their requirements and needs.