A loan against property (LAP), as the name suggests, is a loan you can take by pledging your property as collateral. This secured loan can be used to fund various expenses. It could range from anything such as funding your child’s education, paying for a wedding, taking care of a medical emergency, or even starting up a business. Now, all these could amount to quite an expense, and a loan against property can provide the required funds to take care of the bills.
However, while this loan can be very useful, borrowers still need to keep a few things in mind before they apply for loan against property. Take a look at 5 things that you should be aware of before applying for an LAP:
- Inquire about the eligibility criteria of the lender
For most financial institutions, the basic eligibility criteria for a loan against property in India is for an applicant to be above the age of 25 years, a resident of India, and have a steady source of income. Do keep in mind that the loan against property eligibility criteria could differ from lender to lender. This is why it is better with the lender about this before applying for a loan.
- Understand the loan amount required
You need to be careful about not applying for a loan amount that exceeds your actual needs. This is why it is important to calculate all the expenses that you are going to incur. Whether it is paying for academic expenses, starting a business, or any personal expense, make sure to be aware of the exact amount. This will help in applying for a loan amount that you need and can clear without any financial difficulties.
- Choose a long repayment tenure to ease EMI payments
One advantage of taking a loan against property rather than an unsecured loan is the long repayment tenure. For unsecured loans such as personal loans, lenders usually only offer 5 years to repay the loan. However, borrowers applying for a loan against property get up to 15 years to repay the loan. This makes it much easier to pay off the loan, as the monthly instalments are smaller.
- Be aware of the value of the property
The property price can influence the approval of the lender. This price depends on various factors such as the builder’s reputation, location of the property, available amenities, size, as well as how old the property is. Do note that this can also affect the loan amount that the lender will approve.
Now that you are aware of these things, go ahead and apply for the loan. Do keep in mind that it is important to make sure that the loan can be cleared without difficulty. This is why it is advisable to use a loan against property EMI calculator. This calculator will help in displaying the loan’s EMI payments. Based on these results, you can then decide whether the loan plan is suitable for your budget.
