Are you in need of a large amount of money to meet some unexpected and other vital expenses at a lower rate of interest?
If yes, then the loan against property (LAP) facility can be your best resort amongst other financial alternatives today.
When you apply for the loan against property facility, you not only get to enjoy lower interest rates. Yes, you even get a flexible tenor and fund usage as per your wish.
What is the Loan Against Property?
You get to acquire a higher amount of money when you keep your property as collateral to a lender. This phenomenon is known as the loan against property.
Based on your income, repayment history and another loan against property eligibility terms, you can grab a loan amount. The loan amount that you get is available at a lower lap interest rate as the property is kept as collateral.
As a result, the loan against property facility helps you to repay the loan in smaller EMIs because of the lower interest rate that you grab.
Some of the common purposes that you can meet with the loan against property facility are:
- Urgent medical expenses
- Sending your children for overseas education
- Upcoming wedding expenses
- Business expansion
- Other personal needs
Follow these Rules while Taking out the Loan Against Property
- Borrow only as per your Repayment Capacity
Would you like to repay the LAP EMIs for many years? If not, assess your need carefully and apply for an amount that you can repay without issues. Always look at the bigger picture. You may get the loan against property eligibility for a high amount, but is it worth considering? Think over it as its repayment may affect your monthly budget for a long time.
- Consider a Short Tenor if you can
The loan against property comes with a longer tenor of 2-20 years, which can make the EMI smaller. Paying off smaller EMIs may look attractive in the beginning, but you may end up paying more interest in the longer run. Hence, you can opt for short tenor so that you can repay the loan fast and save the extra interest payments.
- Pay your EMIs on Time and Every Time
Loan defaults or making delayed payments can severely affect your Credit Score. It can also lead to huge penalties that you will need to pay. It will lead to the extra amount other than the bill amount. Hence, it is advisable to repay the EMIs on time and in full. Doing the same will keep you in the good books of the lenders, and keep your CIBIL Score for availing the next loan.
- Get Insurance Cover with Big Loans
With the loan against property disbursement amount running in crores, it should be your prime duty to take an insurance cover against it. It will lessen the repayment burden on your family if anything happens to you. In such cases, the insurance company will pay off your remaining loan amount.
- Read the Terms and Conditions of the LAP
No matter how long and exhaustive your LAP’s fine print is, it is a must to go through and understand it at least once. Doing the same will keep you in confidence for all fees and charges that you may have to pay in different situations to the lender. Make it a point not to sign the loan document unless you are aware of all its clauses.
Applying for the loan against property is beneficial in case if you need a big amount at a lower interest rate. As you are aware of what to consider while applying for the LAP, you will find it easier to apply for it online.
Bajaj Finserv offers pre-approved deals on loan against property, home loans, loan for business, personal loans and more. Going for the same will help you make the loan procedure hassle-free and faster.