It is quite common for people to sell their houses when they are in urgent need of funds. Selling the property means that you are no longer an owner of the property. If this is an option that does not seem suitable, another alternative is to apply for loan against property. This is a good option for anyone who does not want to sell their house but is prepared to mortgage it with a lender for a property loan.
Now, before applying for this loan, go through a few things that you should keep in mind:
- Figure out the loan amount needed
First, make a list of all the expenses to be incurred for the loan. For instance, buying necessary equipment, purchasing office space, additional costs for interiors, etc. Once you are aware of the financial requirements, evaluate details such as your monthly expenses and income. This will help in choosing a loan amount that can be repaid easily.
- Inquire about the eligibility criteria of the lender
The basic eligibility criteria for getting a loan against property is to be a resident of India, above the age of 25 years, and have a regular source of income. However, any additional criteria could differ from lender to lender. This is why it is important to check with the lender about their eligibility criteria regarding a loan against property.
- Be aware of the property value
Even the price of a property will impact the loan approval of a lender. The property value depends on the locality, reputation of the builder, size, services offered, and how old it is. These factors will also determine the loan amount that the lender will approve. A property with high value and in a good location is considered as a low risk for a lender.
- Opt for a longer repayment tenure
Loans against property are often offered for a tenure of 10 to 15 years. This is much longer than unsecured loans that usually have a maximum tenure of 5 years. Since this loan provides the option of a long tenure, it is better to opt for it since paying off the EMIs becomes convenient.
- Focus on the interest rate
The interest of a loan will have a direct impact on its monthly instalments. This is why it is important to focus on the loan against property interest rate while choosing a loan plan. Usually, lenders decide the rate depending on the loan amount and the property pledged. Make sure to get an affordable interest rate so as to not struggle during the repayment period.
- Be aware of the restrictions on the usage of funds
Most of the financial institutions in India have no restrictions on the usage of the loan amount. This amount can be used for any purpose like medical bills, education fees, vacation expenses, etc. However, please note that lenders restrict the usage of the loan amount for illegal activities such as gambling.
Lastly, always make use of a loan against property EMI calculator. This will help you in getting an accurate calculation of the monthly instalments of the loan.