In an ideal world, everyone has money to manage their expenses, but life is no fairy-tale and sometimes we are stuck in situations where we do not know the way out. In such situations, we opt for various financial services available that provide loan to individuals at a particular interest rate.
One of the financial services offered by lenders is Loan Against Property, which allows people to borrow money for their emergencies, keeping their property as collateral. However, the loan is not as simple as you think it is. Here are five golden rules that you can follow while taking a loan against property.
Golden rules to follow while taking Loan Against Property
- Know your requirements: It is important that before you approach a lender know all your requirements. Right from the loan amount, the reason for the loan, your repaying capacity, where you want to use the loan get all your points checked before you opt for a loan. Through this, you will better be able to evaluate all the details minutely.
You must also ensure that you have valid areas to use the loan amount, taking a loan for investment can be a bad idea as you have to pay interest also on the borrowed amount.
- Know your property details: Before you put any of your property as security, make sure to all the details about it. In LAP the sanctioned loan amount, interest rate, tenure all depend majorly on the present price of the property, the location, and other necessary information.
So, before the lender evaluates your property rate, make sure you too have a fair idea. This will help you negotiate more with the lender, and get yourself a good lending option.
- Choose your lender wisely: With digital media, there are many lenders available. Without standing in queues for the loan details, you can check all the lending information of Loan Against Property for various lenders online. You will get the eligibility criteria, documents required, loan against property interest rate being charged, amount being sanctioned through their website.
To make a better decision about the lender, you can use the Loan against property EMI calculator to know the monthly debt that you will have to pay to the lender.
Here is the list of common documents needed to avail of a LAP:
∙ Duly signed and completed the application form
∙ Income proof – salary slips, Form 16, and bank account statement (for salaried applicants). Bank statement, financial statements, and income tax returns (if you are self-employed)
∙ Know-your-customer documents – identity, signature, address, and name and birth date proof
∙ All documents related to the title of the property
∙ Check for the processing fees
- Insure your loan amount: Nowadays you can also insure your loan amount. If you are borrowing a large sum, then this is a good option that you can opt for. The lenders offer term cover of the loan amount for unforeseen circumstances. Through this insurance, the loan repayment burden will not fall on your family members if there is some unfortunate event.
- Choose a smaller repayment tenure: Though a higher tenure, will ensure that your EMIs are low, that also means that you pay more interest on the loan amount. So choose a tenure for which you will be able to repay the EMI while also not burdening yourself for a longer duration.
Applying for a Loan Against property is fairly easy and simple, you can do it through any lender via their website/ app or offline through an agent. However, any complications in the future by opting for a loan through a renowned lender that will offer you not only pre-loan service but also pre-approval customer service. You also would want to ensure that your private information stays safe and is not leaked to unsocial elements.