No one can predict when they might face a sudden expense. For instance, an individual could face a medical emergency or undergo business losses. If looking towards savings is not a preferable option, one can always apply for loan against property. This loan is a secured loan that one can apply for by pledging their property as collateral. With the loan amount, a borrower can take care of various bills as this loan does not limit them to a certain type of expense.
Before speaking to a lender to apply for this loan, there are a few things that borrowers should keep in mind. This is important to make sure the loan does not become a liability or cause financial difficulty in the future during repayment.
So, take a look at a list of rules that one should follow while applying for a loan against property:
- Be aware of the lender’s eligibility criteria for a loan against property
Most lenders have basic requirements when it comes to the eligibility criteria for a loan against property. Usually, a borrower can apply for a loan if they are a citizen of India, are above the age of 25 years, and have a steady source of income. However, each lender could have their specific loan against property eligibility criteria too, which is why it is best to check with the lender about this beforehand.
- Be sure of the loan amount required
There are borrowers who apply for a loan amount that is in excess of their actual requirements. The reason for this is so that there will always be a financial cover if any expenses come up. However, it is still more challenging to pay off a higher loan amount. This is why it is advisable to be aware of the exact loan amount required. This way, it’ll be easier to pay off the loan without any financial difficulty.
- Think about preferred repayment tenure beforehand
A borrower could choose to go for a short repayment tenure to save money on their interest payments. On the other hand, a different borrower could choose a long repayment tenure if their budget does not allow room for paying higher monthly instalments. Make sure to choose a repayment tenure that suits your budget.
- Check whether the interest rate offered by the lender is affordable
The interest rate can actually have a significant effect on EMI payments. An interest rate that is too high can cause problems for a borrower during the repayment of the loan. This is the reason why borrowers should ensure that the lender offers them a competitive loan against property interest rate.
Also, it is very important to use a loan against property EMI calculator before applying for it. This calculator will display the monthly instalments of the loan against property. You can then decide whether it suits your budget.